View all articles
While we are all waiting to see what the final version of the Renters Rights Bill will look like many landlords are considering their future options.
Some landlords are going to wait and see how things turn out after the law changes, others are moving to different markets like supported housing, leasing to councils, Airbnb, leasing to companies who will then let to various tenant types … Many, many landlords are choosing to sell up, even those who have been landlords for a very long time have come to the conclusion that the stress is not worth the profit, especially those who have had to deal with tenants who have damaged their properties, owe them £thousands or have been demanding and have involved local authorities in issues which could easily have been resolved.
Having made this decision landlords have been shocked by the length of time it takes to recover possession of their properties – especially those landlords who don’t understand that section 21 is not the simple no fault eviction they imagine it to be, then there are those who get to court and believe that the judge will simply check that their documents are in order and grant them possession because it is a “no fault eviction” where no accusations have been made and therefore no defence possible. All of this is expected to take a few weeks after a valid 2 month section 21 has been served. In reality it is taking in excess of 6 months from date of service and sometimes longer depending on the local court and the waiting list for a hearing.
Some landlords have already put their property on the market and some have even got a buyer and imagine that its only a formality to get vacant possession.
I know all this because every week we get new posts asking for advice because they have done one of the above and have hit a brick wall. It occurred to me that those landlords need to adjust their expectations:
HELP YOUR TENANT TO HELP YOU
There are of course many tenants who have no choice other than to rent but there are many tenants who would love to own their own homes and are only renting because they cannot find a lender who will support their purchase despite the fact that the level of rent that they pay is often more or about the same as their mortgage would be and therefore they could afford it. There is no doubt that this is the best type of tenant for the landlord who wants to sell up and by helping that tenant to achieve their goals we can achieve our own.
I have permission of the ex-tenant who posted this brilliant post on my Facebook group to publish it here.
“I want to share with you my experience of buying a property On a 100% mortgage. As I read most days people are being served eviction orders on their rental properties just the same as I was and found the prospect of renting again a real struggle due to the current rental market demands with costing pcm. This is what I did from the time I was served notice in November 24 until we purchased our first own home and moved on 14th April 25.
1. Looked at our current rental pcm payment this was £650 and then looked at similar properties in my area which in Pembrokeshire where circa £1000-£1200 pcm as there are an influx of rentals from 2nd homes due to the 200% council tax increase therefore many have decided to rent their 2nd homes out.
2. Decided we could not sustain that amount so looked for alternatives which included council renting (huge waiting list) or buy our first home.
3. Went to a mortgage advisor and found out that even if we could scrape together 5% deposit there would still be fees and other expenses which totalled close to 10k which we didn’t have.
4. Research 100% mortgages and came across Skipton Building Society who offer aproduct call track record, this mortgage is for first time buyer who have rented for more than 6 months.
5. Contacted Skipton who are extremely helpful, they took me through the requirements and sent us details to an online portal which we could upload requested documentation
6. Spent 2 weeks gathering everything I could, payslips, p60’s, bank statements and wrote an income and expenses document on excel.
7. Submitted all the documents around December 16th, and awaited a response. Had feed back with 24hrs we had passed the affordability but failed credit checks. My partner had a very low credit score due to never having financed anything, signed up to a website called check my file which searches all 3 credit agents and gathered information. We found that linking her bank account to Experian we could use the Welsh water direct debit as a proof of payment so we did that and waited 30 days.
8. Jan 20th download check my file data and this showed credit account linked so we submitted the new score to Skipton and it was passed within 48hrs.
9. The important part what can you actually borrow? So unlike a conventional mortgage which is calculated on your earnings the track record is 1.2x your current rental payment. They then take that figure and work out how long left you have until retirement from your current age so in our case it’s was 33 years left until we are 75 years old. We then received a guide amount ours was circa 145k available to borrow.
10. We looked around on popular internet based companies and came up with a blank. Nothing In our area within our budget, well not for a family of 5 anyway.
11. Called every estate agent within a 15m radius explained our budget and the area we wanted to be in and every single one had properties that were advertised for a lot more than we could afford but they knew the owners would be willing to reduce the price.
12. Viewing properties took us one day, we went round 3 houses and found one we really liked, strangely not in the area or configuration we would have thought suited us. Keep an open mind at this point and I will explain why shortly.
13. Get an offer in !!! We loved this house it was up for 170k had been reduced twice and no takers, we talked to the estate agent and it was due to having no allocation for parking. We really didn’t see this as an issue, it’s 10 mins walk for the two youngest to get to school and there are parking areas available on the evening and this worked for our jobs which happened to be 5 mins away by car. We submitted 120k and waited. Within 3 days it was a no the seller wanted 150k, we went back almost straight away and said 130k and we will give you two weeks to discuss but that’s the last offer. 13 days later the Estate agent called the offer was accepted.
14. Contacted Skipton and arranged a valuation, had a request for further documentation, this is quite important Skipton also include into your financial situation thing like careers allowance and pip, they will not accept any moneys received under the universal credit rent assistance which we had all the above. The thankfully this was sorted in a few days and the process continued.
15. Survey completed and the property was under valued at 140k which was great as we only offered 130k. Next job find a solicitors.
16. Prices vary by quite a lot, we had 14/15 quotes, we decided on the ones that didn’t keep hassling us for work which was a small family run business in Bridgend. Their prices where competitive and I must say their work was great. Quote was accepted and we sent a small deposit over to start the legal work £400.
17. Skipton then passed off the mortgage and we paid £20 for a bacs payment once the solicitor requested the money. That was my only cost with Skipton £20 for the mortgage product.
18. Solicitor completed 11am 14th April all done, final invoice was £800.
20. Just to be clear this is not a stressful as I original thought it would be, buying a house is meant to be up there with one of the most stressful things you can do but I found it to be quite liberating. My total cost was £20 for the bacs and £1200 for the solicitor. Just to let you know where I ended up longer term with this my mortgage is over 30 years on a fixed 5 year term @ 5.52% and my payment is £701pcm so only £50 more than I was paying in rent.
21. We as a family are genuinely so much more happier where we are now and I’m glad I did it. For all those out there that are where I was in oct/nov last year you can do this, companies like Skipton are genuinely there to get you into your own home without over stretching you financially. They can help you purchase your current rental should you wish or find a new home like we did. NEVER GIVE UP.”
This post attracted a lot of interest and discussion but the one comment I want to share because I am sure that it will be a question that many would be buyers would ask:
“We looked at a 5% deposit on a “standard mortgage “ and got offered £265k. The payments would have put us in a poor position long term and probably been a real financial issue. Some companies and mortgage advisors are quite happy to put you in that situation. Skipton cap at 1.2x your rental of which you have to show you can comfortably pay. There’s a lot of information provided to make sure you understand negative equity and you can opt for overpayments should you want to to so you can offset that. Personally I just found that changing our expectations and being more realistic worked better, I would have loved to have spent 200+k on a bigger more modern house but I certainly wouldn’t want that type of repayment over me each month.”
Finance is not my thing but I am reading several options for tenants to buy from their landlord and these too are worth checking out and sharing with your tenants who, like the guy who wrote the post above, don’t think that they can afford to own their own homes and if they cannot find a property to rent they will have no choice but to sit it out until you evict them. This is not good for the landlord, apart from feeling guilty, it’s the expensive option and delays the sale by a very long time.
THINGS WHICH I HAVE LEARNED
- Keeping your rent low is not helping your tenant because if you decide that you need to remove them for whatever reason they will struggle to find another property which they can afford to rent, and they will be forced to wait for a court order or even a bailiff. Many tenants would really like to avoid all that, especially since they are very likely to pay our court costs but they fear the extra cost of rent.
Review your rents every year and put on a small increase if you feel that they are high enough compared to local averages. Use a Section 13 notice of rent increase with no less than 12 months between increases and no less than 1 months notice. Don’t try to justify the increase I have realised that no matter what the landlord says most tenants who post on my group think that the increase is too much, the property isn’t worth it and the landlord is just money grabbing. Having never paid a mortgage they don’t understand the costs nor the increasing costs of compliance but more importantly nobody gave you the property and without it they wouldn’t have a home. Of course it works both ways, without good tenants we wouldn’t have a business therefore a good tenant is a reasonable expectation not something to reward financially but to be treated with respect.
- Don’t feel the need to explain why you need to sell, you may get on well with them but they are your customers not your family and your business is your business
- Having served a valid notice do not agree to extend the time before you take it to court, you may be told that they have another property lined up but often this is just a way to extend their tenancy and if you leave it too long and you’re using section 21 it will expire – 6 months after date of service on tenant – and you will need to begin again
- Do not agree for them to leave their belongings in your property for a short time after they move out. This prolongs the process of preparing the property for sale and can cause claims of damages/losses if contractors have been working in the property
- If you’ve got grounds for a section 8 use theme it’s a myth that section 21 is easier and less expensive – its not
- In my opinion its worth the cost of engaging an eviction specialist to do everything from service of notice to meeting the bailiff with you. This puts distance between you and the tenants, who are probably desperate and may use emotional blackmail which is very uncomfortable. Remember you aren’t doing anything wrong and while it’s a horrible situation for tenants renting from a private landlord doesn’t come with the expectation of a home for life. Having engaged an eviction specialist do as he says and make the tenants understand that you are now using a specialist and will only do what he says.
- If your tenants leave without you having to take it to court its worthwhile giving them 100% of their deposit back even if there are items which you could have claimed for – you will have saved a lot of money and time and it will make a difference to them towards their moving costs
- If your tenants become difficult/threatening/stop paying rent don’t retaliate. Keep away, don’t reply and add the rent to the claim at court so that they end up with a CCJ if they don’t pay and this will follow them for 6 years and may prevent them borrowing/leasing/renting …. Until they pay you
- Loosing your home is probably one of the worst things that can happen to a person, particularly where children are involved. Give them some space and don’t overreact
- Don’t expect to get valuations or viewings while they are still living there, its their legal right to refuse regardless of the 24 hours notice which some landlords think has magic powers. They can changes the locks and stop anyone entering if they think that you will go in without permission
It would be great if more tenants could become home owners when they leave our properties but unfortunately with the reduction in rented properties which is now a reality in many areas some tenants will only have the option of social housing and we all know that this is in short supply therefore they may be forced to wait for the bailiff to remove them, they cannot stop this and its very humiliating please try not to make it worse even when you have been waiting many months and are really frustrated.
