Every week, landlord news portals all over the UK are reporting on the exodus of landlords selling up as rising costs leave landlords feeling the pinch and are either on the brink of (or already) making a loss.
Many landlords are selling up completely to enjoy early retirement while many more are simply reacting to the current conditions by selling off some properties to raise cash to pay off mortgages on their best performing properties early. As a result of landlords needing to adjust their businesses and the likelihood that ‘no fault’ evictions will be abolished in the next 12 to 24 months, we’re also seeing landlords rushing to issue Section 21s to their tenants but tenants refusing to leave because they cannot afford to move in the current cost-of-living crisis and/or have nowhere to go.
What legal options do landlords have if a tenant refuses to leave after a Section 21 has been issued and the notice period expired?
One option is to go to the courts to get possession through a court appointed bailiff. The advantage of this option is landlords may get a better sales price by selling with vacant possession but if property prices fall as expected, a better price then might not be as much as compromised price now – esp if tenants stop paying rent (as many do once a landlord/tenant relationship enters into eviction stages) with legal cost, court costs and bailiff costs deducted from the ‘better price’. Other issues to consider are long waiting lists for court dates, the number of technicalities that can result in landlords having to start the process from scratch and long periods of being in a highly stressful situation.
A second option is to negotiate with tenants directly to try to come to an agreement in everyone’s best interest. The advantage is again selling with vacant possession but there are many ways a landlord can fall foul of tenant’s rights which could make the situation worse should the case need to go to court if tenants refuse to negotiate.
A third option is to call in practiced expert negotiators with inhouse legal advisors who have a proven track record of arranging vacant possession legally without going to court.
A fourth option is to sell to other investors avoiding the need to evict tenants.
Sellers normally continue to collect rent right up to the completion date and they typically walk away with 85% of the property value after all bills and costs are deducted.
An option not mentioned above is to do nothing – to weather the storm as it is now and hope for brighter days.
So what is the best course of action? Should we even be thinking of selling when property prices have fallen from their post-lockdown peak?
To answer this, it’s time to really take stock of the current situation:
- Bills haven’t gone away, and they need paying, taxes have put many of us under stress
- Many landlords are still unable to get round to sorting out their empty properties and refurbs
- There’s less cash in pot due to rate rises, so even if you don’t sell all your properties, selling some properties to raise funds is a sensible option
- Tenants are in arrears and many are paying low rents, having a huge effect on landlords
- The market is likely to drop further as the months go by, so landlords need to act fast.
With more buy-to-let regulations and restrictions on the way, a cost-of-living crisis that is likely to get worse before it gets better affecting tenant’s ability to pay rent, the threat of more interest rate rises on the way in 2023 and industry-wide expectations that house prices will fall further, there is no doubt that selling now is going to be the best option for many landlords.
New eviction powers to get rid of anti social tenants
Landlords and agents acting on their behalf are to be given more powers to evict unruly tenants who ruin neighbours’ lives through persistent noise or by being drunk and disorderly.
Although details are missing in the government’s statement, this would appear to be one of the few recent policy decisions to support the wishes of lettings sector trade bodies. These have expressed concern that with the abolition of Section 21 - still expected as part of the Rental Reform Bill later this year - landlords would have difficulties evicting anti social tenants in HMOs in particular.
Commenting on the announcement, Ben Beadle - chief executive of the National Residential Landlords Association - says, “anti-social tenants blight the lives of fellow renters and their neighbours. Plans to end ‘no explanation’ repossessions risk making it harder to tackle such behaviour. Whilst we will study the detail of the Government’s plans carefully, we welcome its commitment to strengthen the ability of landlords to evict unruly tenants. It follows extensive campaigning by the NRLA to ensure swift and effective action can be taken against those causing misery in their communities. The law must be on the side of the victims of anti-social behaviour and we are glad that the Government agrees.”
Polling by the NRLA has found that 50% of landlords have at some point attempted to repossess a property because of a tenant's anti-social or criminal behaviour. Of this group 84% had received no help in tackling it from their local authority and 75% had no assistance from the police in dealing with anti-social tenants.
The new powers for landlords are part of the government’s so called Anti-Social Behaviour Action Plan which claims to offer “a zero-tolerance approach to all forms of anti-social behaviour, and give the police and local authorities the tools they need to tackle the problem.”
Under the plan, 16 areas in England and Wales will be funded to support either new ‘hotspot’ police and enforcement patrols in areas with the highest rates of anti-social behaviour, or trial a new ‘Immediate Justice’ scheme to deliver swift and visible punishments. A select few areas will trial both interventions, and both schemes will then be rolled out across England and Wales from 2024. Hotspot trailblazer areas will see an increase in police presence alongside other uniformed authority figures, such as wardens, in problem areas for anti-social behaviour, including public transport, high streets or parks.
Under the new Immediate Justice scheme, those found committing anti-social behaviour will be made to repair the damage they inflicted on victims and communities, with an ambition for them to start work as soon as 48 hours after their offence so victims know anti-social behaviour is treated seriously and with urgency.
Offenders, who will be made to wear high-vis vests or jumpsuits and work under supervision, could be made to pick up litter, remove graffiti and wash police cars as punishment for their actions, and victims of anti-social behaviour from the local community will be given a say in offenders’ punishments to ensure justice is visible and fits the crime.
Under the zero-tolerance approach, Nitrous oxide or “laughing gas” will also be banned to send a clear message to intimidating gangs, that hang around high streets and children’s parks and litter them with empty canisters, they will not get away with this behaviour. Housing Secretary Michael Gove said, “anti-social behaviour erodes local pride, blights our high streets and parks and is a stain on too many communities across the country. We know that it is more likely to flourish in areas that have, for too long, been overlooked and undervalued. This government was elected on a mandate to deliver change for those communities, and that is why the Anti-Social Behaviour Action Plan is critical. So we will intervene directly to prevent high street dereliction. We will deliver tougher, quicker and more visible justice to prevent thuggish behaviour in town centres and we will ensure young people have the opportunities and activities available to them to succeed - all backed by new investment. This is about acting on the people’s priorities, delivering safer streets so we can level up across the country.”