Dear Supporters,
I hope this message finds you well. I want to apologise for the recent lack of updates. Like many of you, I've been navigating the challenging landscape of being a landlord in these tumultuous times. Today, I want to share some insights and experiences, highlighting the significant issues landlords are currently facing and what the future might hold.
Firstly, many landlords are grappling with a harsh reality as their five-year fixed-rate mortgages, typically ranging from 3.49% to 4%, have now reverted to variable rates as high as 10%. This drastic increase has created a financial strain, especially for those who have chosen not to increase rent in support of their responsible and timely-paying tenants. These landlords are consciously helping to mitigate the cost of living crisis by keeping rents below market value, indirectly promoting affordable housing.
However, the outlook for landlords is becoming increasingly grim. Thousands are exiting the Private Rented Sector (PRS) market. The government's approach to balancing the budget seems to target the PRS sector directly. Proposed rent controls and changing mortgage criteria are poised to make it even harder for landlords. Mortgage applications for Buy-To-Let (BTL) properties are now primarily based on rental income rather than personal income. If your rental income is below the Local Housing Allowance (LHA) rate or any future rental control thresholds, remortgaging could become unattainable.
To illustrate the challenges, consider a typical scenario faced by many landlords. A landlord serving a Section 13 notice in early 2024 might find that the council is paying £1,346.19 in rent, while the market rate needed to secure a remortgage is £1,800. If the council offers only a £3 increase, and the landlord's mortgage payment has increased from £822 at 3.49% to £2,355 at 10% per month, the landlord faces a significant financial shortfall.
Dealing with tenants on Universal Credit (UC) adds another layer of complexity. If a tenant falsely claims they have moved out after being served notice, the landlord's application for direct rent payments from UC can be declined, despite providing extensive evidence. This bureaucratic hurdle can result in weeks of lost rent and additional costs for repairs.
Resolution and Path Forward
Given these challenges, it's essential that we, as a community, advocate for changes that support both landlords and tenants. Here are a few potential resolutions and actions we can take:
1. Advocate for Fair Legislation: We need to lobby for fair legislation that considers the interests of both landlords and tenants. This includes pushing back against overly restrictive rent controls and ensuring mortgage criteria are reasonable.
2. Support Networks: Forming support networks among landlords can help us share resources, legal advice, and strategies for dealing with problematic situations. These networks can provide emotional and practical support during challenging times.
3. Engage with Local Councils and MPs: Regularly communicate with local councils and Members of Parliament to express our concerns and share real-life impacts of current policies. Personal stories and data can be powerful in influencing policy changes.
4. Financial Planning: Seek financial advice to navigate the current market conditions. Exploring options like fixed-rate mortgages or alternative financing can provide more stability in uncertain times.
5. Tenant Education: Educate tenants about their responsibilities and the financial realities landlords face. A better understanding can foster cooperation and reduce conflicts.
By working together and staying informed, we can navigate these challenging times and advocate for a fairer system. Thank you for your ongoing support. Together, we can raise awareness and work towards a more balanced and fair system for both landlords and tenants.
Best regards,
Franklin Iziren