In the late spring, the Government announced that they were planning to end no-fault evictions for tenants living in private rented accommodation.

I have had a number of Locks Heath Landlords contact me anxious that removing a Tenant from their Locks Heath buy-to-let property in the future had possibly become a lot more problematic. Yet, at the launch of the consultation on the changes to the piece of legislation relating to no-fault evictions (called the Section 21 amendments), the Government wanted to assure British Landlords that they would be protected by the bolstering of the existing Section 8 legislation. The current Section 8 allows Landlords grounds for recovery of their properties for reoccupation of the Landlord, non-payment of rent and other legitimate factors.

2,104 Locks Heath landlords are affected by this potential change in the law

Yet, it is comforting for Locks Heath Landlords and Tenants in the fact that most competent Letting Agents very rarely have to evict a Tenant. In the worst-case scenarios the Tenant needs evicting (normally because rent hasn’t been paid) or because the Landlord is either selling their buy-to-let investment or moving back into their property. Look at the consultation – it has been indicated that those grounds will not be removed from section 8 powers during the government’s consultation and the talk is they will be bolstered and improved. To put the removal of Section 21 notices into some context…

Only 22,527 Section 21 notices made it to Court last year, out the 4.5million private rented households

Scotland banned no fault evictions (i.e. their own version of a Section 21) two years ago, and the model suggested by Westminster is similar to that of the new Scottish system. Landlords, Tenants and Agents have had to adapt north of the border, and there hasn’t been the mass exodus of Landlords from the market since then.

Yet the call in the lettings and legal profession is… if the Government is intent on making these changes, we need well-funded courts which specialise in housing and tenancy matters (like there are for family law and children). Especially when the Landlord manages the property themselves (without an Agent), the issue of eviction comes about from a breakdown in communication between Landlord and Tenant. The courts could use their mediation skills to make it simpler and faster for Tenants and Landlords to obtain quick and available justice instead of the existing drawn out procedures under Section 8, which helps no one (not even Tenants). This is important as the demand for Locks Heath rental properties is growing and people need a home to live in – fact.

Locks Heath needs an additional 100 buy-to-let properties per year for the next decade to meet the demand from Locks Heath Tenants

As an agent in Locks Heath, I know most Locks Heath Landlords consider buy-to-let in Locks Heath as a long-term investment, with the average Landlord looking to retain their buy-to-let property for at least 10 years and beyond. Talking to other Agents around the country, over 90% of Section 21 notices are made by the Tenant, not the Landlord. Removing the Section 21 notice could affect Tenants more than Landlords.

Replacing Section 21 with a process that requires a Landlord to firstly have a good reason, and secondly go through due process, will likely remove the more unprincipled Landlords from the property market. That is great news as those unprincipled Landlords will either sell their properties to new buy-to-let Locks Heath Landlords, or to Tenants who want to buy them. So, it could be a small win for people looking for a new Locks Heath home, and a disappointment for unprincipled Landlords simply looking for a cash cow ‘have no care about the property or Tenant’ investment vehicle.

If you are a Locks Heath Landlord and want to know more about this, whether you are a Landlord of ours, a Locks Heath Landlord with another Agent or a self-managing Landlord, feel free to drop me a line or pick up the phone (I don’t bite) to chat about the implications of this and other legislative changes that are on the horizon.

Many mature readers of this Locks Heath property market blog will remember buying their first home as 20 or 30 somethings, probably in Locks Heath many years ago, yet read the newspapers now and feel it is all doom and gloom for todays’ first-time buyers.

So, I wanted to look at the facts, instead of newspaper headlines.

Back in 1995, the average Locks Heath first time buyer’s house cost £43,890, whilst official figures state today it is £179,700

So, looking at today’s property prices, it could be perceived that owning a home is beyond the reach of most Locks Heath first time buyers and that renting is the only way for younger members of Locks Heath society to have a roof over their head… or is it?

100% mortgages (so no deposit needed to be saved) were rife in the 2000’s and Northern Rock were famous for their 125% mortgages (i.e. you borrowed 25% more than what you were paying for the house, again with no deposit). Yet when the credit crunch hit in 2008 such mortgages disappeared overnight – ending the dream of homeownership for many. Yet would it surprise you to hear that 95% mortgages (i.e. the first-time buyer would need to save a 5% deposit) have been available since late 2009 and 100% mortgages (i.e. no deposit) were made available in 2016.

It is £166 per month cheaper to buy a typical Locks Heath first-time buyer home than to rent the equivalent property.

Prospective Locks Heath first-time buyers could make a saving of £1,991 per year on average if they moved from renting to owning. My calculations assume that first-time buyers raise a deposit of just 5 per cent and make mortgage payments over 35 years with the Barclays 95% mortgage with a fixed interest rate of 2.48 per cent interest. At this level…

Today, the average deposit needed by a Locks Heath first-time buyer is £8,985

Those able to raise that deposit, would pay £633 pm on average in mortgage payments, while the average rent for the same property would be £799 pm and the household income to support such a mortgage would only need to be from £37,937 pa.

Of course, buying your first home is a massive financial commitment and investment with up-front costs to ponder on, yet long-term the financial benefits can be substantial. With annual savings of £1,991 a year, this can really mount up over time and, of course, once the mortgage is paid off, one will have a valuable asset.

Yet, the elephant in the room is the raising of the 5% deposit

Well most first time buyers, even most of you who are now in your 50’s and 60’s may have used the Bank of Mum and Dad to help with the deposit, yet it’s only fair that most parents still expect their offspring to contribute to the deposit and this is where it comes down to choice. I have spoken to many of my friends and family to reconfirm my initial thoughts that it comes down to priorities and choices in life. To save the deposit mentioned above, sacrifices are required to save that amount of money.

According to a survey in 2018, the average millennial goes out two nights a week and spends on average £63.36 per night out, that’s nearly £6,600 per year – a very expensive hobby. Nearly a third of millennials surveyed had smashed their mobile phone in the last 12 months. Then there is the obsession of having the latest tech, with the need to constantly be upgrading one’s mobile phone. In fact, the cost of the brand new iphone 11, recently released, is just shy of £900. Even those on contracts can expect to pay upwards of £80 per month for the newest phone upgrade, yet if they kept their old phone after two years, a sim only deal with the same minutes and data would set them back no more than £25 per month… it comes down to choices. Save for a deposit and reduce your expenditure on socialising and mobiles etc and have a valuable asset at the end of your mortgage or continue as you are.

I am not here to make a judgement – everyone is free to make their own choices in life.  All I am doing is highlighting the real situation so you are aware of the full story.