Who can claim victory in the battle of landlords and tenants?

When you read or listen to landlords and landlord organisations and then listen to tenants and tenants organisations it sometimes sounds as if they are on different planets. 

Or (more worryingly) on different sides of a battleground. 

Both of them say they feel powerless and at the mercy of the others. But surely they can’t both be right.

Or can they?

And is the current situation one which is going to last?

Let’s take a look first at things today from the point of view of both tenants and landlords:

Why tenants think it is better for landlords

In my recent podcast with Ben Beadle, our guest Justin Bates said that it was definitely landlords who were in the better place.

His main reason was that demand currently outstrips supply, so landlords have a degree of choice and flexibility that tenants do not have:

• They set the rent
• They can insist on guarantors
• They choose the terms of the tenancy
• They decide whether to offer a break clause
• And, if they want to get a tenant out (in normal circumstances) they can do this under the mandatory possession grounds.

This means, Justin concluded, that structurally, landlords are more powerful than tenants.  Even though individual landlords may be in difficulties. 

Another argument I have seen from tenants is that at the end of a long tenancy tenants are left with nothing and the landlord is left with their mortgage paid off. Which (they say) is unfair.

Other tenants consider that the very fact that one person can earn money by renting property to another is unfair and unacceptable and say that property should be distributed more evenly. Something which is unlikely to happen in today’s society.

What about the landlord’s view?

Why landlords think it’s better for tenants

Landlords main complaint is around control of their properties. Once they allow a tenant into occupation, whatever the tenant has agreed to in the tenancy agreement, there is little that landlords can do, while the tenants remain in occupation, to stop them doing what they want.

When it comes down to it, there are really only three weapons that landlords can use:

1 Injunction proceedings

This is expensive and is rarely done, the most common type of injunction is the ‘gas injunction’ normally brought by social landlords against tenants who refuse to allow gas safety inspections.

2 Evicting the tenant

Even in normal times, this takes a very long time, up to six months or more, and tenants can run up a lot of rent arrears and cause a lot of damage during that time

3 Financial claims against the tenant

However, once the deposit is used up there is little a landlord can do to enforce this (the court enforcement procedures being notoriously ineffective) and most landlords don’t bother.

Many landlords, stuck with tenants trashing their properties and refusing to pay the rent, feel as if tenants are taking them for a ride with impunity. Causing them massive damage and expense with no comeback.

There is also the problem of taxation and many landlords consider the taxation regime for landlords to be deeply unfair. They are taxed on the basis that their income is ‘unearned’ but have to comply with ever-increasing and confusing regulation.

In short

• The main issue for tenants is that landlords are the gatekeepers for accommodation and can impose what conditions they like as a condition of allowing people access. And that they can, ultimately, force tenants to leave.
• The main issue for landlords is that once tenants are in occupation, there is little that landlords can do to control what they do there, and that the process of removing them takes too long – which causes them substantial financial loss which is mostly irrecoverable. Plus they are unhappy about the tax regime and increasing and confusing regulation.

Are there any solutions?

Looking at landlords first – the main solution for them is a careful choice of tenant. It really is the most important thing. Then once tenants are in, provided the tenants are ‘good people’, treating them well will result in goodwill allowing both parties to work together to overcome any issues.

As has happened in numerous rented properties during the pandemic.

There is also the fact that landlording (if I can call it that) is essentially a business and no business is risk-free. The main protection against risk is insurance, which can be expensive.

So far as tenants are concerned, they need to present themselves as someone a landlord will trust as a tenant. Then they are more likely to be selected. Once in occupation, the better they behave as tenants the less likely their landlords are to want to evict them.

Very few landlords (other than those needing to sell up) will want to evict a tenant who is paying rent and looking after the property well.

Changes on the horizon

Things may be changing though. COVID has changed many things including working practices. Vast numbers of people are now working from home and so can move out of the large cities and find somewhere larger, cheaper and more congenial than a city centre rabbit hutch.

Although we often read articles telling us that there is a housing shortage, other articles tell a different story. They tell us that there is no actual shortage of property – just a shortage of property where people need to live.

But if people no longer need to live in those places, then this changes the balance.

A recent article on Property118 points out that:

• 27% of renters in London plan to move after the pandemic has ended,
• 49% of those are determined to leave the city,
• giving a projected 13% net exodus of renters from London, and
• 60% of all renters who plan on moving post-Covid-19 are not looking to move to a major city

Furthermore, it seems that large numbers of younger people are now living with their parents and so are no longer in the market for accommodation.

Already it is predicted that rents in London are due to fall, giving more power to those tenants who still need to live there.

Also, if as predicted more government departments move to the North, and if new green industries are developed in the old industrial cities then this will encourage more people to move to the North where much of the surplus accommodation is to be found.

Already there are moves to create a huge low carbon industrial hub in the Humber region which could massively affect the prosperity of the surrounding area.

Tenants may find over the coming years, that they are more powerful than they think.

Conclusion

As always arguments are based on what has happened in the past. And in the past landlords have been more powerful because, as Justin pointed out in the podcast, in most cases demand outstrips supply so they are on the ones with the whip hand.

However, this may change.

The change in working practices and the new industries which we all hope will be developed to combat climate change may result in a massive change in demand with a shift towards country living and (hopefully) the north.

Which will work in favour of good landlords in areas where property was previously in short supply. If there is a surplus – tenants are not going to tolerate poor housing and will vote with their feet.

Returning to the landlord v. tenant debate, I think this is the wrong approach. If both parties regard the other as ‘the enemy’ then things are more likely to go wrong.  Both parties should regard each other as an equal and necessary partner working together to make the tenancy work.

There are bad landlords and bad tenants but they are in a minority – and both landlords and tenants should work together to eliminate them.