Part One of our review of 2017 looked into how investment property and the buy to let sector have fared amidst regulatory change. However, yields and statistics are not the only defining features of the private rental market, and the second part of our annual review will look into the other factors that have impacted the sector this year.
An obvious place to start is with Universal Credit, the controversial benefit reform that was due to be rolled out nationwide in 2017. There was widespread concern that the new system would lead to an increase in tenant rent arrears. Because of this, many landlords opted not to let to tenants on benefits. Recent research revealed that 92 per cent of social landlords had experienced an additional workload as a result of Universal Credit.
Right to Rent was a second reform that caused headaches for landlords. The RLA called for a review of the UK Government’s Right to Rent scheme asking for a full review of the scheme’s impact on tenants after 42 per cent of landlords across England and Wales said that they are now wary of ending to those without a British passport as a result of the scheme. In October the chief inspector of Borders and Immigration announced a review of the Right to Rent. However, this ‘will not examine any unintended consequences of Right to Rent, for example discrimination against would-be tenants, increased homelessness, or displacement’ due to an alleged lack of capacity.
This lack of capacity was mirrored in local council’s apparent lax attitude to rogue landlords. Figures from the Freedom of Information Act revealed that six in 10 councils across the UK had not prosecuted any landlords in the last year. 80 per cent prosecuted fewer than five. The council’s argued that budget pressures had made it hard to regulate the sector. The London borough of Newham was the forerunner in tackling criminal landlords, having prosecuting 331 landlords in just one year.
With regard to rogue landlords, controversial buy to let investor Fergus Wilson finally took a step too far this year following his attempt to ban ‘coloureds’ from residing in his homes due to the alleged smell of curry. The Equality and Human Rights Commission to begin legal proceedings against Wilson, on the basis that his actions denied Indian and Pakistani people the chance to live in his homes. A county court case, brought by the UK Equality Watchdog, Maidstone County Court ruled the policy was unlawful. If he persists with the policy, he could be fined under the Contempt of Court Act.
However, whilst some landlords give the sector a bad name, others strived to provide an excellent service in 2017. Simple Landlords Insurance found that amidst the current climate of regulatory pressures, the majority of landlords are supportive of their tenants. 43 per cent confirmed that they have or would support vulnerable tenants, including those receiving housing allowance, if they failed to report damage to their property. Just 27 per cent said they would serve notice.
Additionally, 70 per cent of landlords support local authority licensing schemes, which protect the rights of tenants. Such schemes have become increasingly prevalent this year. Many are also particularly focused on fire safety checks following the Grenfell tragedy, with 40 per cent checking fire alarms and a quarter installing carbon monoxide alarms.
This positive attitude from landlords has also been projected toward their investments. Confidence in property investment ass on the rise in the third quarter of 2017, following historic lows in the second quarter.
2017 marked a year of changing social attitudes, with this having positive effect on the buy to let sector. Two in five landlords are now women, suggesting property is taking steps towards gender equality.
2017 was a big year for buy to let, with general upheaval having a detrimental effect on the market towards the end of the year. However, landlords remain positive for 2018, as predictions from ARLA Propertymark found that 59 per cent of letting agents think that rent prices will rise.
The minimum energy efficiency standards coming into effect in the New Year could see up to 300,000 properties leaving the market, pushing rents up even further.
Steady growth and a reinvigoration of optimism proved this year that landlords are in it for the long haul.