Problem tenants: why a third of landlords are considering selling up

A huge number of landlords could be forced to sell due to unruly tenants, a new survey suggests

A third of landlords have considered selling up, with 47% of those asked saying they have experienced problem tenants who haven’t paid their rent on time.

The findings come from online letting agent MakeUrMove, which polled 1,000 landlords to find out how they feel about the changing housing market.

A quarter of those asked said they have been lumbered with large bills for damage and disrepair when tenants have moved out. One respondent claimed they’d even been left with £16,000 worth of damage.

Most alarmingly, in light of the new Tenant Fees Bill which will put a cap on deposits paid by tenants, many landlords feel that the cost of restoring a property for new tenants once old ones have moved out, far outstrips the amount of deposit taken at the start of a tenancy.

Despite this, as many as 98% of those asked believe it’s important to keep tenants happy and 92% strive to maintain good relationships with their tenants.

Driven out of the market

MakeUrMove managing director Alexandra Morris said as many as 60% of British landlords are “accidental” or “casual” landlords with just one property supplementing their main income and the fear of problem tenants could drive them out of the market.

“As these landlords make up the backbone of the British property market, it’s important they feel happy to carry on letting. Stress and financial pressures caused by ‘challenging’ tenants are sure-fire ways to put them off and steer them away from further investment," says Morris.

“This could also be a real worry for smaller landlords when it comes to cash flow. Generally, as long as the rent is coming in every month to cover mortgages and other associated costs, smaller ‘casual’ landlords don’t often plan for bigger costs caused by damage from tenants or lack of funds due to unpaid rent. As a result, when a big outlay comes around, some landlords find themselves in trouble, and there’s very little protection offered from the government against these things.”

A third of landlords say they may be forced to sell up due to problem tenants Photo: Graeme Robertson/Getty Images

Squeeze on landlords

Recent tax changes are also likely to put off many non-professional landlords. Before April 2017 landlords could deduct the interest they paid on their mortgages from their taxable income, via their annual tax return, but this is gradually being phased out. As the changes don't affect company landlords, many would benefit by registering as a limited company, although this creates additional paperwork and complications.

Another problem faced by landlords is the issue of extra people living in the property who aren't on the tenancy agreement. Under the Right to Rent legislation, landlords are required to check the immigration status of those living at their property. That's a problem where existing tenants are sub-letting without the landlord knowing leaving them open to a substantial fine.

Morris said: “Legislation is currently swinging towards tenants, at the risk of undermining the vital role played by private landlords in the UK housing market.

“Legislation such as the proposed deposit cap could make it even harder for private landlords to deal with challenging tenants, resulting in further pressures on landlords to sell up.

“While landlords selling their properties may appear to offer some short-term benefits for buyers, it cannot deal with the systemic problems surrounding the lack of housing supply. It will also reduce supply in the rental sector, which will increase demand and likely only increase pressures on the remaining landlords to increase rents.”