There are tentative signs that landlords are beginning to return to the buy-to-let market, particularly in London where house price falls and steady rental growth are gradually enticing investors back, according to Knight Frank.
The company reports that during the first 11 months of 2019, landlords acquired 11% of homes sold in Great Britain, the same level as 2018. But in November alone, the proportion of homes bought by investors increased to 12%.
London recorded a bigger rise in landlord purchases. Landlords purchased 13% of homes sold in the capital during the first 11 months of 2019, up from 11% during the same period of 2018. This was the first rise since 2015 but is in part due to fewer owner-occupiers transacting in the market. But will this trend continue?
The latest UK Finance mortgage data published this week suggests that property purchase and remortgage approvals in November held up relatively well given that the country was in full general election mode.
Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco, said: “For a lot of British households, November was a classic case of better the devil you know.
“They chose to get their houses in order and secure a mortgage before a potentially disruptive election result.
“In the week following the general election result we saw a slight uplift in enquiries but the buyer spirit was largely trumped by the Christmas spirit.
“January will be the real test of consumer sentiment as we approach our departure from the EU.
“There is still much uncertainty as to the intricacies of how we leave the EU, but people at least now know it’s coming and that creates confidence.”
The figures also reveal that there were 16,200 remortgages in the buy-to-let sector in October, 2.4% fewer than the same month in 2018.
Montlake added: “While we are expecting an uplift in transactions and remortgages, it would be premature to assume that 2020 will be a boom year for the property and mortgage markets.
“As negotiations with Brussels unfold there is still the potential for volatility.”
Under-resourced county courts are struggling to cope with the number of possession claims being put forward, ‘causing misery for landlords’ not to mention costly delays, according to Landlord Action.
The vast majority of residential possession claims are dealt with in the county courts and enforced by county court bailiffs. But government spending cuts, an increasing number of possession cases, court delays and administrative errors mean evictions are taking longer than ever, pushing many landlords into debt.
In a recent Section 21 case handled by Landlord Action, a tenant claimed she did not receive the ‘How to Rent Guide’ so the court set a hearing date of 27th June 2019. But the court postponed the hearing with just 24 hours notice because the Judge was no longer available.
Several hearing dates have since been set and cancelled, leaving Landlord Action with little choice but to chase for a new date some 12 months after the original Section 21 notice was served back in January 2019, and the landlord no closer to gaining possession.
“We are experiencing cases like this time and time again” said Paul Shamplina. “It’s not only causing extra work for us at Landlord Action, meaning we now have a full-time member of staff whose main responsibility is chasing courts for updates on possession orders, Notice of Issues and bailiff appointments, it is also causing extreme stress for the landlords who are already facing financial hardship as a result of rent arrears.”
Landlord Action is now calling on the government to increase investment in the court system before pressing ahead with plans to scrap Section 21 of the Housing Act, as part of the new Renters’ Reform Bill.
Shamplina continued: “The situation is the worst I have experienced in my 28 years in this industry. Cases are being overlooked, delayed or thrown out due to administrative errors and there is little we can do to improve matters for landlords when we are at the mercy of the courts.
“Remember, many courts were closed due to cost saving by the Ministry of Justice (MOJ).”