There is no getting away from the fact that the rise in the number of buy-to-let properties in Huddersfield has been nothing short of astonishing over the last twenty years. As a result, many in the press have said Britain is a broken nation, with many twenty and thirty-somethings unable to buy their first home. The press has named this group ‘Generation Rent.’
Huddersfield landlords have been accused of scooping up all the
smaller Huddersfield properties for their buy-to-let property empires. Others
blamed the Government (of both persuasions) for pouring petrol on the
buy-to-let fire for giving landlords an unfair advantage with the way
buy-to-let has been taxed in the past. Many have said these landlords have
priced out Huddersfield's 'Generation Rent'. Many say they are rogues, and you
can see why there is little sympathy for landlords, especially as…
Huddersfield
landlords receive £113,176,452 a year in rent – easy money or what?
So, as we come out of lockdown, I want to make a stand for Huddersfield
landlords and talk about the great work they have been doing during the
pandemic.
Since lockdown, it has been (almost) illegal to
evict a tenant from private rented property. Yet, in the last few weeks, this ‘ban
on evictions’ has begun to be eased, making some commentators forecast a ‘tsunami
of homelessness’ as landlords ready themselves to kick out the tenants who
cannot pay their rent.
You might say they can afford it, yet I need to
highlight an often-untold story in the massive numbers of Huddersfield
landlords who have co-operated with their Huddersfield tenants to evade eviction.
The personal finances of some Huddersfield landlords
and tenants have been ruthlessly strained during the last 16 months — something
that is going to have ramifications on the back pockets of both landlords and
tenants, as well as the attraction of being a buy-to-let landlord (more of that
later).
1,168
Huddersfield tenants are in arrears with their rent
to
the tune of £2,084,333.
That's money these landlords need to pay their
mortgages with and even to live off themselves.
The eviction ban was imposed in March 2020 and the Government
has expected private landlords to stand the cost of their tenant’s rent if they
could no longer pay. It was estimated over 1 in 5 landlords with mortgages had
requested a mortgage payment holiday in 2020. Thankfully, that now stands at 1
in 100 as most Huddersfield landlords with shortfalls in rent have been using
their own personal savings to cover the mortgage payments.
I have seen so many landlords giving their Huddersfield
tenants rent breaks and discounts to help them through these times. However,
most landlords I talk to acknowledge that it is better to have a tenant paying
something rather than a tenant paying nothing, hoping that total rent will
start flowing as the economy recovers.
Going
into the pandemic, 1 in 25 Huddersfield
tenants were in arrears, yet that now stands at 1 in 11.
So, are we going to see lots of evictions? I would
go as far as to rebuff the idea that we will see a rush to the courts of
landlords to obtain possession orders now the eviction ban has been lifted. I
have always viewed evictions as a last resort.
Before the pandemic, it took about 12 months for courts
to hear rental repossession cases, so this backlog will be nearer two years (if
not more). Nonetheless, the threat of a County Court Judgement (CCJ) often makes
tenants pay up as it will demolish their credit rating, making it very challenging
for them to rent another home.
I feel for those Huddersfield tenants under
furlough or reduced hours as they have the quandary of wanting to reduce their
outgoings by moving to a cheaper rental property, yet whose rental deposits will
be sacrificed to cover their rent arrears. However, some have said that because
house prices have exploded during the last 16 months, Huddersfield landlords
should write off their tenants’ arrears as a goodwill gesture.
The
issue is, 2,080 Huddersfield landlords only have a single property for rent, so
the arrears would have to be funded by their personal savings.
For them, the pandemic experience could be the incentive
to sell up for good.
A National Residential Landlords Association survey
found around a third of all landlords were now more likely to sell their
buy-to-let properties altogether or sell some of them. This would mean fewer
properties for tenants to rent, thus driving up the rent.
According to government and industry data, evidence
suggests that a tenant who rents a property directly through a landlord and not
through a letting agent is between two and three times more likely to go into
arrears of 2 months or more. Is this because tenants know that private
landlords who advertise directly for tenants on Gumtree and other platforms
don't carry out the checks letting agents do on them?
Many of those landlords are switching the
management of their property to an agent, and for those landlords sticking with
self-management of their property, there is circumstantial evidence they are starting
to become a lot pickier when starting new tenancies. Even though illegal,
spurning tenants on benefits is woefully all too common. I also worry there
could be a stigma about renting properties to self-employed people because of
the erratic nature of their income.
Looking into the future, I envisage a growth in the
use of ‘rent guarantor contracts’, whereby the tenant is called upon to provide
a 3rd party person to pay the rent if the tenant doesn’t. These are pretty common
for student lets and those on certain benefits, and it wouldn't surprise me if
these are used more often for self-employed tenants and regular professional
lets.
That is why I believe Huddersfield landlords should
be celebrated ... most of them have been saviours. These are my thoughts - what
are yours?
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