Is the age of the buy-to-let landlord crashing to an end?

Alice Cockerell thought she had found her ideal tenant. After posting an ad for her West London apartment online, she was approached by a man with seemingly impeccable credentials, including one from a wealthy aristocrat.

When she met him in person, Alice was struck by what she considered to be his “great honesty.”

Little did the 35-year-old writer know that she had just handed her keys to a tenant from hell who refused to pay a penny of rent after the first month – costing her £31,000 in lost income.

Some 456 days later, she has only just managed to evict him – with the help of bailiffs.

“It took six months of unpaid rent before the penny dropped,” Alice says. I would hopefully stop checking my internet banking every few hours, but he refused to leave my flat. That was the worst moment.’

Cases like Alice’s are repeated across the country.

Property claims from landlords rose 160 percent between April and June 2022, compared to the same period last year.

Meanwhile, the number of seizures actually granted rose 210 percent – from 1,582 to 4,900, according to figures from the Department of Justice (MoJ).

The sharp increase is due to the fact that evictions will be banned between August 29, 2020 and May 31, 2021 to protect tenants during the coronavirus pandemic.

But as a result, experts say the system is now at a breaking point as landlords face massive backlogs and delays. They warn that courts could soon be flooded with similar cases as the cost of living crisis leaves more tenants behind.

Figures from the Office for National Statistics this week show that nearly 39 percent of renters reported having trouble paying their rent.

Paul Shamplina, founder of advisory service Landlord Action, says: “In 2023 we will see more hearings on seizures than before the pandemic.

“There will be tenants who are in arrears and landlords who are struggling to pay their own mortgages. It’s going to be a very tough year.’

It can be difficult for some renters to empathize. Rents are well above inflation, with 45 percent of private renters seeing rents rise in the past year, says campaign organization Generation Rent.

Landlords have been vilified for years. But Alice’s story serves as a clear warning of the pitfalls in the increasingly precarious buy-to-let sector.

It took her six months between obtaining a property warrant and the actual eviction of the property by her tenant. At that time, she didn’t get a cent in rent.

This is consistent across the industry as MoJ numbers show the median time for a landlord claim to take is 23.4 weeks.

And a few weeks later, Alice is still discovering the damage to her beloved flat.

At this point, when a landlord wants to evict a tenant, they have two options: a Section 8 or a Section 21 notice.

An article 8 – as Alice concluded – is applied when someone has rent arrears, has caused damage to the property or has caused nuisance to the neighbours.

Meanwhile, a Section 21 eviction is a no-fault process that allows a landlord to reclaim their property even if they have no cause for eviction.

But earlier this year, the government controversially agreed to scrap Section 21 evictions altogether. It means it will be harder than ever to get rid of a tenant and landlords may overlook when faced with their own cost of living.

This type of eviction has been banned in Scotland since December 2017, although they remain politically divided north of the border. Often, property owners give Section 21 notices to misbehaving tenants, as this is a faster route than Section 8s, as they require less proof and the landlord accepts the rent arrears as a loss.

Ben Beadle, of the National Association of Landlords: ‘The government proposals threaten to make countering antisocial behavior more difficult and cause serious damage to the student housing market.

‘In addition, there is an urgent need to speed up the judicial process.

‘It takes about six months between a landlord who wants to take back a property and it actually happens.

“This is far too long if a tenant may not pay their rent or exhibit antisocial behavior during this time.”

Jasvinder Singh knows this pain all too well. The 41-year-old was forced to watch in horror as his tenant destroyed his beloved three-bedroom flat in Ilford, east London – all while running into more than £6,000 arrears.

It took him more than a year – and three bailiffs – to evict her. While requesting a Section 8 announcement, he ended up getting her out on a Section 21 because it was faster.

Jasvinder says, “It was a nightmare. It affected everything from my family to my lifestyle.

‘I had my own mortgage to pay. Last year it was my 20th wedding anniversary. My wife and I were supposed to go on vacation, but we had to cancel it.’

The situation is compounded by the fact that the buy-to-let sector is being pushed to a breaking point. Rising rental mortgage rates – now the highest since the 2008 financial crisis – and tighter lending criteria are making it more difficult than ever to earn money from a rental property.

This is especially damaging to landlords, as many are geared to low-rate environments.

For example, due to the low interest rates, it was wiser to invest in three properties with mortgages rather than in one property with cash.

But as landlords start refinancing, many may find they no longer meet their lenders’ stress tests — or struggle to find a good deal.

Shocked banks pulled hundreds of deals in the wake of former Chancellor Kwasi Kwarteng’s disastrous mini-budget last month. Many have cautiously begun to return to the market, but at high rates.

And lending criteria have tightened as banks prepare for future increases in the Bank of England’s key rate. Earlier this month, The Mortgage Works began applying a minimum stress rate of 8.49 percent to all new buy-to-let applications, up from 5 percent previously.

Yesterday, the lender pulled out, saying it would offer a “tailored approach” to stress rates.

At the same time, rents – which were sky-high last year – are also starting to fall. Research from Hamptons shows that rental growth in England and Wales slowed to 6.9 percent, from a record high of 11.5% in May.

Meanwhile, the average rent of a home in Southeast fell by 1.7 percent per year in September.

Landlords are also at the mercy of the government’s increasingly strict red tape. From 2025, all new rental homes must have an energy-efficient EPC label C or higher.

Existing leases have until 2028 to comply with this. Landlords whose properties fail to meet this rating could be fined up to £30,000.

It is therefore no wonder that they are leaving the sector en masse. Chris Sykes, Mortgage Broker at Private Finance, says: “This is a worrying time for many landlords and another one they have to endure. The buy-to-let market has changed a lot in the past five years.’

h.kelly@dailymail.co.uk