In case you missed it, the world has changed, in just about every way.
We experienced, and are still experiencing an unprecedented pandemic, the economy took quite a hit and so did the work/labour force, government spending went through the roof, and sadly…a lot of people got sick and died.
Here in the UK we have coupled a pandemic with Brexit, and the government has also made changes in stamp duty for property purchases, and also changed how buy-to-let properties are taxed, and what a landlord can use as an expense to offset any losses.
Many feel it is not a good time to be a landlord, or have a property portfolio. But there well always be landlords, tenants, and those that want to be a landlord.
The Different Types of Landlords
Here in the UK, as in other parts of the world, we have two (2) types of landlords:
- Social Landlords
- Private Landlords
Many associate or think of Council housing when they think of social landlords, but in many areas of the country, the Councils sold their properties to Housing Associations. These Housing Associations then let out and maintain the properties.
The Housing Associations are non-commercial, and many let properties out based on affordability.
You may let a property from a Housing Association for £400 a month, in an area that the average rent is £700 a month.
Housing Associations usually partner with various maintenance services for repairs, and also have money and budgeting partners to help those tenants struggling with their rent.
Private landlords are a different animal, and that is not to say anything bad or poorly about private landlords. They are business people. Private landlords are a commercial, for profit, entity. This is how businesses operate.
Pandemic, Landlords, and Tenants
During the pandemic and subsequent lockdown, evictions were suspended, put on hold. Landlords could not evict tenants for non-payment, in part due to the fact that many people lost their jobs, or were on furlough. So the government placed a moratorium on evictions.
That moratorium has now been lifted, so landlords an evict tenants if they need to do so.
As a landlord, if you did not receive the rent, you still may have had a mortgage to pay, you were losing money.
Banks and lenders may have offered a “breathing space” period of no payments, but it still affects your credit.
So being a landlord was a tough place to be.
Now that the eviction ceasefire is up, and landlords can get on with their business, they are more cautious and careful as to they rent to. The due diligence or vetting process has had the bar raised.
Landlords Scrutinising New Tenants Finances
Recently in the news, it has been reported some landlords are taking the application process to let a property to a whole new level.
One can expect when you apply to let a place to live, the estate agent or landlord will want to check references, do a credit check, and verify employment, want a deposit to offset any damages, but this new process is almost Orwellian.
Asking potential tenants to allow the landlords reference checking company access to your bank details for 90 days. For 90 days the reference checking firm can see what money is paid into your account(s), and what money goes out.
This is all available due to “open banking”, which allows third parties access to your bank records.
Landlords want to insure you can pay the rent, and by looking at your bank details it gives them insight into your finances. This in addition to verifying your income with your employer.
Landlords also want to insure you will continue working and not lose your job, and afford the Council Tax, utilities, etc.
On mortgage application reference checks, the reference to verify income and employment sent to your employer used to ask the employer the question, “what is the likely hood of future employment in the next 12 months?”.
Landlords took a hit financially during this pandemic, the world is changing, and so is how we will let homes.