LegalforLandlords group chief executive Sim Sekhon didn’t mince words when talking about the reforms affecting the property rental sector and advised that landlords must ensure they focus on letting to ‘quality’ tenants.
Sekhon was speaking after a recent landlord-focused event held in Bristol. Naturally, the upcoming Renters’ Rights Bill was a hot topic. Alongside his seminar and panel appearance at the event, Sekhon was able to have face-to-face conversations with many landlords. He told us that they have grave concerns about the legislation eroding their rights. Others are angry that the government is pressing ahead irrespective of the log-jammed courts system and shortage of bailiffs. Some are also worried about taxation measures that may be outlined in the upcoming budget.
It is, without doubt, an unsettling time, but Sekhon is surprisingly pragmatic, pointing out that some issues are beyond the control of the individual. And in such cases, he believes the best approach is to have a clear, rational plan.
He told us that in a climate of rising arrears, landlords are becoming more selective in their tenant choices, but stressed that careful scrutiny, going forwards, needs to be the landlords’ default approach. He went on to discuss provisions within the Renters’ Rights Bill which increase the rent arrears threshold from two to three months and increase notice periods. He stressed, “Rents have risen, and the stakes are higher. You simply cannot risk agreeing to a tenancy without thorough referencing. Review the information provided carefully and, wherever possible, meet with the potential tenant.”
It is, of course, possible to protect your interests with Rent and Legal costs insurance cover. Sekhon told us that around 16% of new let instructions are now covered by such policies and that he anticipates that figure will soon double. It’s an indicator of the market, income levels and the time it can take to gain possession when a tenant defaults.
We asked Sekhon whether he would advise landlords who currently self-manage to switch to working with an agent. He said that the move could be beneficial but only if the agent was reputable. “Do your homework,” he said. “Find the agent who’s fully conversant with the LegalforLandlords October – The Renters’ Rights Bill Will Make Finding ‘Quality’ Tenants Critical regulatory and EPC changes, who understands your investment, the importance of yield and long-term capital appreciation.”
It may be months before the Renters Rights Bill is enacted, but it is already having an impact. While it may aim to protect the rights of tenants, its provisions are forcing landlords into a very cautious approach, demanding higher affordability and more employment security from potential tenants. Those already struggling to secure a rental property will find their task is getting harder, not easier.