Note – we are not looking at vertically challenged landlords here but those with small portfolios.
One thing seems clear from the various budgets and statements coming out of the Treasury recently – they have a down on the small private landlord.
First we learn that the tax system is to be changed to be less advantageous – in fact so much so that some landlords are considering leaving the country as their profits on their investments will be totally wiped out
Then there is the massive increase in rules and regulations – in particular the unpopular right to rent checks (where, if the new Immigration Bill is passed, landlords could face a prison sentence if they fail to comply) and the changes to section 21.
These changes are often good in many ways, but this does not alter the fact that the landlord’s job is being made harder and more risky. Plus fines in the Magistrates Courts are now unlimited.
Then the most recent budget has increased stamp duty on buy to let and second homes for everyone EXCEPT larger organisations with more than 15 properties.
What IS going on?
Just for fun, I have put together a list of all the possible reasons I can think of on why Government is hammering the small landlord, mostly ‘conspiracy theory gone mad’ theories.
I am not saying I agree with any of them, I just present them to you for your consideration. And amusement.
However there is probably at least a small seed of truth in all of them (and maybe much more than that) …
1. Increasing home ownership to avoid future care costs
This was something I discussed in my post here. It is the idea that government want as many people as possible to own their own home, as then when they get old, the cost of their care will come from the equity in their property rather than be paid by for the state.
I can see why Gov’t would want this, as if no-one owned their own home and the state paid for everything, the cost would be astronomical.
It could easily bankrupt the country (assuming we are not already bankrupt, see 6 below).
2. Discouraging the amateur landlord – as an alternative to mandatory accreditation
This is the idea that people who own just one or two properties are more likely to make mistakes through ignorance.
Discouraging / eliminating these small landlords would be cheaper than setting up mandatory accreditation and training (as they are doing in Wales and which looks set to be considerably more expensive than everyone thought).
It is also based on the premise that the bigger landlords are always better ….. Ha!
3. Targeting landlords because ‘no-one loves them’
Government need more money and it has to come from somewhere.
Reducing benefits has got everyone up in arms so they are dropping that and instead going for unpopular targets who few are likely to support.
Like landlords.
4. Back scratching help for bigger companies
The Tories being the party of business and business interests, are only interested in helping big business and corporations (of course).
This means making it impossible for the smaller businesses to survive as they are not ‘one of us’.
Why should millionaire Tory ministers be bothered about the interests of the ‘man in the street’ (who could have just invested his inheritance from Granny in a small buy-to-let) anyway?
Small investors are just the scum beneath their feet. Even Jeremy Corbyn cares more about them …
5. There is a plan to make all rented housing dominated by big business
This is a lesser form of (4) and takes into account the dismantling of our social housing system, currently well underway.
If true, it would result in everyone who cannot afford to buy (an increasingly larger proportion of the population) having no alternative but to rent off large corporations.
The problem with this theory is that few of the big corporations have in fact (so far) invested in the private rented sector. Maybe this is coming, once the small investor has been driven off.
6. Forcing smaller investors to invest in electronic assets for easier takeover
This is the idea that it is easier for a cash-strapped government to take over your assets if they are in electronic form rather than in bricks and mortar. Should they need to do this, e.g. if the economic situation reaches critical.
For example I read a financial report only the other day, which pointed out that our national borrowing exceeds our net value and in real terms the country is more or less bankrupt. Financial Martial Law is (the author claimed) in the long term, inevitable.
The next step (if there is anything in this) will be Government limiting the amount of gold, silver, diamonds etc or indeed cash, which individuals are allowed to hold ….
(Tip – Consider stocking up on dry goods, candles, valuable items suitable for barter and investing in an off the grid power supply …)
7. Forcing ordinary investors to invest in lower yeilding investment funds
This, a varient on (4) above, is the theory set out here where the author says
I believe … The City of London has its greedy eyes set on the residential property market in most parts of England. What they can’t stand is that people with any spare capital rightly prefer to invest their cash direct into property rather than get ripped off by investment vehicles with their outrageous fund management charges. —
They are waiting for all the small-time landlords, driven out of business by Osborne’s iniquitous tax reforms to come to them and invest in rip-off Residential Investment Funds, where instead of getting up to 8% on their investment, people will end up with say 3% or so – and we know where the rest will go!
8. Making Britain an unattractive place to live in, to discourage immigration
If there is no more rented accommodation available (poor immigrants realistically can only live in the private rented sector), particularly if benefit entitlements are dramatically reduced (and if the criminal landlords they would normally resort to have been closed down), this may discourage the hordes of immigrants who are currently jostling to come and live here.
Maybe.
9. Bribing the people
This is that money for first-time buyers and shared ownership is simply a bribe for your votes. Like Thatcher did (although Osbourne has less to give away, as most of it has already gone).
The idea being that people will vote Tory in the hope that they and their children will have a chance to share in the spoils.
However, the real result of this sell off is that fewer resources are available for the rest of us. As we all know, about 30-40% of these properties end up in the hands of landlords anyway (although now this will be the larger landlords holding more than 15 properties and not the small investor).
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What conspiracy theories do YOU have about the attack on landlords?
Is a move towards big corporates a problem? From the perspective of a renter myself, I’m not so sure.
At least I can be sure someone else’s fancy car bills won’t take precendence over my own boiler repairs in the depths of winter.
There’s still a shocking number of small private landlords who really don’t have a clue – after five years of renting and five properties, I’ve just moved into my first one where my deposit has actually been protected.
And then there is the feeling of being a “customer” of a landlord, and not a serf who is being “allowed” to live in a “their” property.
The corporate sector is far, far, far smaller than smaller private landlords at the moment.
Sorry that you have had so many problem from small private landlords, it may be due to the type of property and/or location you are renting.
Asking well established agents how long they have managed each property MAY be a way to find better landlords – as most agents will not keep a bad landlord as a full management client.
Most small landlords know that the profit is made by keeping a tenant for as long as possible, and to do so, boiler repairs etc must be done quickly.
It is easier to strike a rapport with a small landlord who can be more flexible. In addition, many small landlords are actually very relaxed when it comes to rent increases and do not charge fees.
I am sure that large corporate landlords would behave as letting agents regarding fees (i.e. charging for everything and anything) and that they wouldn’t miss an opportunity to raise rents.
Lastly once an area has been taken over by a few large corporate landlords, competition has gone, and you might have no alternative should you fall out with your current landlord.
Be very careful what you wish for.
I’ma renter. On the 4th November we reported to the letting agent that our washing machine wasnt receiving power. Whether or not this was a fault in the machine or the mains plug behind which isnt attached to the wall, a fault report over a year ago, we have no idea.
A month later the agents have done nothing so I emailed the landlord who advised me that he had paid the agent to fix the unattached plug socket last year.
He advised me to deal directly with him in future but in the meantime these high street chain charlatans have been been ignoring us and charging him for work they havent done.
My advice to all tenants…..use land registry, find the contact details of your landlord and blow you agents out, they are not your friends.
Yes, many small landlords are shockingly ignorant of their obligations. One reason why we have this blog.
I agree, quality corporate landlords would be good.
This is just a list of conspiracy theories, just for fun 😉
10. A Fishy Theory.
After the collapse of the stock market; bank interest rates were slashed; pension pots had already been raided by Gorden Brown. Buy to let was the only option for people with some capital left who needed an income. People were corralled by both the labour and conservative into the buy to let “net” and now George is doing what any other Chancellor in this country has done when short of cash which is to create a tax that lifts any money made by Landlords into the Chancellor’s coffers. They did it with pensions and now here it comes with buy to let. Making capital (and I don’t mean money, I mean capital) is so difficult to achieve in this country because of our tax laws. Very few people make it and those that do either have made their money abroad or decide to leave and live abroad. But as you say Tessa it’s just a theory.
Thinking there is a planned “Conspiracy Theory” may be giving “them” more credit than is due…..
The current MPs want to remain in power….
Any landlord that will change how they are going to vote has already done do due to the income tax changes….
Being seen to be more anti landlord then labour, may be a way to keep labour out of power without effect most “hardcore” conservative voters.
MPs just don’t understand how the court system does not work in real life and the effect it has on landlords not taking risks.
MPs just don’t understand much about the rental market at all…
@MMC Nice one.
Tessa – you do know how many shadow cabinet ministers are millionaires I assume? And how many went to public school (re point 4).
Never thought I would see the day when such an unworthy article appeared on Landlord Law Blog – even if meant to be in jest.
Surprised to see Romain gracing it with a response too.
@IO Point 4 does not mention public school. I don’t know how many ministers are millionaires but that’s not the point.
The article is a collection of points of view and conspiracy theories – you’re not telling me that no-one ever says anything like that?
Number 3. Easy targets, simple as that.
Numbers 2 & 5 are just a welcome by-product of pursuing number 3.
The rest are nonsense.