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This was the topic of one of the debates at the Property Investor Show at Excel in London this past weekend.The panel of experts debating this consisted of Richard Blanco who is a landlord & NLA Rep, Peter Littlewood of landlord association iHowz, Tony Gimple of Less Tax for Landlords, and Property Investor Ruban Selvanayagam. I caught up with the panel after the debate to find out the outcome:
Thank you to all the panel members for taking part in the interview.What did you think of the conclusion that the PRS is heading for a big "shake down" where amateur/accidental landlords - the mass market of landlords - will be forced to leave the sector?SEE ALSO - 7 ways first time landlords can mitigate riskUP NEXT - Is BTL still viable for first time landlord? DON'T MISS - Insider insights on "game-changer" PRS reportNOW WATCH:
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
With the greatest respect to the panel, I completely disagree.
I am an accidental landlord. I am an amateur landlord. Through Property Tribes I am better informed than the majority of accidental/amateur but I am what I am. I know of several others in a similar situation. These are landlords that through choice, circumstance or ignorance do not have Buy To Let mortgages and do not have ASTs. In my community this amounts to a significant proportion of rental accommodation. The changes in legislation may, or may not, effect this sector of the PRS but more importantly, any changes are not yet being enforced.
Speaking to people who rent locally, a tenancy agreement is not a priority. In fact, most that I have spoken to do not have one, and have an "arrangement" with their landlord who only has the one rental property. It seems that the more legislation that is introduced into the PRS, the more creative landlords and tenants are becoming in finding another way.
In my experience government legislation is not professionalising the PRS and forcing the amateur/accidental landlords to leave. In fact, the opposite appears to be the case. Legislation is forcing some professional landlords to leave and creating opportunities for amateur/accidental landlords which are also in high demand from tenants.
Thanks for sharing an alternative view Gary. That is always welcomed here and that is what debates are for - to tease out the issues via multiple opinions and views!With regards to:Speaking to people who rent locally, a tenancy agreement is not a priority. In fact, most that I have spoken to do not have one, and have an "arrangement" with their landlord who only has the one rental property. It seems that the more legislation that is introduced into the PRS, the more creative landlords and tenants are becoming in finding another way.When you say "creative" and "finding another way", do you mean avoiding regulation and legislation and taking cash payments for rents - that kind of thing?I would appreciate clarification.
Avoiding regulation is an appropriate term as opposed to evading. From what I hear these arrangements are close enough, but not necessarily spot on. Cash payment is certainly popular.
£625 pcm is popular and is a little below the local market rent. I presume these landlords are taking advantage of the Rent A Room Allowance on their main home. Currently this is possible, whether the changes next year will be enforced is yet to be seen.
A few tenants are paying the mortgage (resi) direct and the landlords are of the opinion they have no declarable income. Not entirely correct but I haven't heard of anyone coming unstuck. The agreement would be closest to a housesitter licence, but this probably wouldn't stand up if challenged.
I have met one person who has a licence for security in a flat above a commercial premises - that was inventive!
The most significant observation is that nearly all these landlords only have one rental property and the agreements are based on trust, between people that know each other in the community.
There are people who appear to be doing fine until they get a bill for past taxes or an insurance claim is denied. While it might feel it is working now, that is because nothing has popped rather than proof it will not pop.
Anyone accepting rent from a person who lives in the property (their primary residence) is a landlord and there is an AST even if no paperwork was signed. The notice periods, obligations, deposit requirements, etc all apply.
The bulk of the rental sector in the UK is not done casually. Many landlords with only 1 property rented use agents. Some do not and I am sure there are people who do what you say.
When the tide goes out, you get to see who was swimming naked. - Warren Buffett
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I am not seeing any evidence in my local community that the changes in legislation are affecting the amateur/accidental landlords. I agree that this may change in the future and was not making a recommendation.
I disagree with your statement regarding ASTs. This is valid for the majority, by default, but not all landlords. Lodger landlords are a common example, but there are others.
The man who is swimming against the stream knows the strength of it. - Woodrow Wilson
A new quarterly overview of the UK lettings sector reveals three key trends: viewings are rising and more tenancies are being signed, but supply is on the way down.
The first edition of the survey, to come out each three months from software company Reapit and market intelligence consultancy Dataloft, shows viewings up 13.3 per cent on a year ago, and lease signings up 3.5 per cent.
However, private rental supply has declined 6.9 per cent.
Despite this, rents have stayed broadly flat over the past year but the organisations behind the survey warn that rents may well rise over the coming year because of these trends.Full/source article