Be wary of crocodile tears of politicians over exit of private landlords

It was an entirely predictable outcome of recent changes to landlord and tenant law that many single-property landlords would decide that the changes tilted things so badly against them that they would exit the rental market by selling their properties and for that purpose seek vacant possession.

Not merely was it predictable; it was very loudly predicted. But the Government blundered ahead with legal amendments that would only encourage single-property landlords to exit the rental market.

Now Sinn Féin are throwing their hands up in horror at the results of their own political agitation. The number of evictions to enable sale by landlords has doubled in a year.

Why is this happening? Many small landlords have seen their rental property climb out of negative equity. They now confidently believe that they can realise their investment in a buoyant property market, even considering the transaction costs involved and any capital gains tax liability.

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Equally and perhaps more important, they now understand that this misguided government has effectively given any tenant of a dwelling the right after six months to retain possession indefinitely unless the landlord terminates the tenancy for one of four permissible reasons.

These reasons are (i) that the landlord requires the premises to house herself or himself or a close family member, (ii) that the landlord wants to redevelop the house and has obtained planning permission to do so, (iii) that the landlord wants to refurbish the home (in which case the landlord must give the tenant first refusal on the property once refurbished, or (iv) that the landlord is selling the property and requires vacant possession for the sale.

These statutory restrictions on getting your property back mean that a landlord cannot let a house for, say, a term of four years and decide at the end of that period to find a new tenant, to let it to an employee or a friend, or to make it available for short-term letting as a holiday home.

[ Budget support for tenants and landlords pledged by Varadkar amid record rent inflation ]

[ Rents soar by highest rate on record as availability of properties hits all-time low ]

Another new change is that where a landlord has let a property to, say, four sharing tenants, they are at liberty to bring in a substitute tenant and the landlord cannot object unless he or she can demonstrate reasonable grounds for doing so. An elderly couple can bring in relatives or non-related long-term carers who can apply to become co-tenants. In short, the landlord may never recover possession.

Add to those factors the predicament of a landlord who has let a house or apartment on a fully furnished basis — with dishwashers, clothes-washers, cookers, fridge-freezers, and all furnishing and curtains. If tenants enjoy tenancies of indefinite duration, the ongoing obligations of the landlords to maintain and renew the contents and to make external and internal repairs is a very significant personal liability.

A single-property landlord might be happy to undertake such a liability for, say, five years — but not for a lifetime. And yet such a landlord is dealt with as though he or she was party to a tenancy in an unfurnished apartment block let by a big buy-to-let corporate investor. Let’s not forget that it is the landlord who is liable for local property tax and management charges in many developments.

When you change the law there are consequences. There may be more votes in appearing to see things entirely from a tenant’s perspective. But if you make being a single-property or small landlord very, very onerous, and give effective control over property overwhelmingly to tenants, don’t be surprised if landlords decide to dispose of their asset to a purchaser who can afford to buy the property for their own accommodation, ie with vacant possession.

Most landlords do not want to screw the highest rent possible from tenants; they value reliable careful tenants who will take a property for a definite lease period. When that become legally impossible a huge number of single-property landlords will exit the market.

We should be wary of the crocodile tears of some politicians who now behold the fruits of their simplistic and wrong-headed demands and reforms.

In 2009, Threshold, the homeless charity, persuaded John Gormley to make regulations outlawing bedsits with effect from 2013 on the seemingly plausible ground that every tenant should have a separate bathroom and kitchen. The bottom rung of the housing ladder was sawn off for many thousands of vulnerable tenants who lost their modest dwelling, many in buildings later converted to trophy homes. Ridiculously, house sharing became ever more prevalent, and the government even ended up backing shared living developments.

So, just as with bedsits, we again have people posing as the tenants’ friend bewailing what they created — the exodus of single-property and small landlords from the private rental market causing property sales with vacant possession.