It is fair to say it has been a torrid time for both tenants and landlords in the private sector. Furlough has helped but unfortunately the scheme will not last forever, coming to an end in October. However, recent regulatory changes by the UK government are yet another nail in the coffin of many previously blossoming private rental portfolios.
Evictions pushed back until 20 September 2020
The UK government recently announced that eviction hearings will not resume until the 20 September 2020. If their recent track record is anything to go by, there is no certainty that they will even resume on this date. Many private landlords are struggling to make ends meet, racking up mortgage holidays and experiencing a significant reduction in their rental income. Unfortunately, there is more bad news to come!
Six month notice for eviction
In a body blow for many private landlords, the UK government has announced the introduction of a six month period notice for eviction. This effectively means that landlords will be unable to sell their properties until mid-March 2021 (at best). The problem is, in the current environment, with the constant threat of another wave of the coronavirus, few property investors will be keen to acquire private tenants as well. When private landlords are eventually able to sell their properties, might they flood the market?
Exceptions to the eviction ban
At the same time the UK government has announced a number of exceptions to the new eviction rules. Those issues involving antisocial behaviour, criminal activity and non-payment of rent for more than 12 months will be “fast-tracked”. Quite what “fast-tracked” actually means in the real world remains to be seen. There was also a rather ambiguous notice that evictions can be brought forward “where private landlords would otherwise face unmanageable debts”. Unless private landlords are given solid long-term financial assistance by the government that final notice could be telling!
Will private landlords miss out on the property boom?
There are many reasons why the UK property market should be in the doldrums. However, recent figures from the Nationwide Building Society show average UK house prices are now at an all-time high. Quite how long this will last remains to be seen, with many property experts scratching their heads in amazement. There lies another issue for private landlords – will they miss out on the property boom?
Come January 2021, the UK government will make a £1000 payment to employers, for each employee retained during the furlough period. It is fair to say that many employers are holding on for this final windfall. Recent figures suggest that the coronavirus support scheme has already cost in excess of £300 billion. At some point financial assistance for the UK business sector will be withdrawn. Unfortunately this is likely to lead to a significant increase in unemployment with a knock-on effect to the housing market and affordability.
The UK private rental market has become a cash cow for the government, and an easy target for politicians looking to curry favour with voters. Once you strip away the misleading comments, misunderstandings and downright lies, these are investors who plugged a huge gap left by the UK government and local authorities. There is still a significant housing shortage in the UK, but this would have been much worse without the growth seen in the private rental market since the 1980s.
So, it is safe to say that private landlords have bailed out the government and local authorities on numerous occasions. They have asked for no favours, and received none, instead hoping forlornly for a level playing field.