‘I lost £72,000 after tenants stopped paying rent – it will be worse under Labour’

Landlords are selling up over fears Labour’s ban on no-fault evictions will leave them tens of thousands of pounds worse off and unable to evict law-breaking tenants.

Labour has pledged to outlaw Section 21 evictions from “day one” – a move that has sparked panic among investors who fear that a ban without a review of the courts could leave them locked out of their homes.

Chancellor Rachel Reeves has also said she is in favour of rent caps. The move would allow councils to prevent landlords from raising their rents above a threshold every year.

The crackdown has raised fears that the Renters’ Reform bill – designed to empower tenants – will instead drive up rents which are already at a record high.

A similar move in Scotland, introduced by Nicola Sturgeon, backfired and led to higher rents and a reduction in housing supply, making the country a “no-go” zone for investors.

Melanie Leech, chief executive of the British Property Federation, said in June that the swift introduction of the controls had made investors “really nervous”.

Landlords across the UK are similarly nervous about what the new Labour Government could introduce in its first weeks in power. Several told The Telegraph that they would sell up if the Government put more pressure on investors and banned no-fault evictions.

One landlord, Jarek Darecki, 50, said that increased regulation has made it harder financially to be a landlord.

He said: “If Labour abolishes Section 21 completely and if they are going to put in place rent caps, then I will be putting properties on the market.”

Mr Darecki said he had suffered losses as a result of unpaid rent. In one instance a tenant was able to stay in a £3,000-a-month London property without paying rent for two years before he was able to reclaim it.

“There is no support for landlords, while there are organisations to tell tenants how to avoid paying rent,” said Mr Darecki, who lost £72,000 from the property in total.

Half of Mr Darecki’s portfolio of 50 properties are holiday lets and the other half are long-term rentals spread across north-east London, Nottingham, Wales and Wakefield.

If Labour’s changes go ahead, he said he would also consider converting his business model to operating holiday lets only, leaving the long-term private rental sector.

There are also fears that Labour could go further than Section 21. In opposition the party pushed to ban landlords from selling their properties in the first two years of a new tenancy, extending the current limit by 18 months.

Labour also used the debate on the Renters’ Reform Bill to apply a “hardship test” allowing courts to refuse a possession order of a rented property if it would cause greater hardship to the tenant than the landlord.

Any changes would come on top of those introduced under the last Conservative government, which landlords say have made it harder to operate. In 2020, the party ended tax relief on mortgage interest payments, increasing costs for landlords just as the cost of borrowing has shot up.

‘I’m selling up when my tenants leave’

Margaret Melrose, 70, has four rental properties, three of which are in London. She’s already started selling off her portfolio as her tenants leave.

It was the growing weight of regulation on landlords that pushed her over the edge, she said. “ But I will not go to those who are good tenants and say I’m selling up, you need to move. You can’t do that to people, it’s their home.”

Ms Melrose first became a landlord by accident, opting to keep a property she once lived in and rent it out, rather than sell up, but decided to add to her portfolio to boost her pension. Now she’s waiting to see what Labour will introduce, but is going to keep selling.

“It will depend on what Labour does, but I am not going to change my business plan at the moment,” she said.

‘Legislation against landlords will drive up rents’ 

Michael Mortimer, a 34-year-old landlord and estate agent from the North East, said: “I hope that Labour aren’t as direct with the attack as the Tories have been.”

He said that he had been contacted by landlords of up to 30 years standing to sell their portfolios ahead of further reform. He warned his clients were worried about the abolition of Section 21 and the introduction of rent controls. “Landlords have been coming to me and telling me they’re planning to sell,” he said. 

“There is still the problem of the gap between supply and demand in housing. I know that Labour are going to legislate against landlords, which I think has the opposite effect of what they want.” The young investor said that increased legislation could push up rents, as landlords look to get out of the market, leaving fewer homes available for rent.

“Even the talk of the Renters’ Reform Bill has driven up rents,” he said. “We’ve been making sure that rents are at the right level now, in case any rent controls brought in. We’ve been making sure that the tenants we take into our properties are really properly vetted and referenced, and with guarantors, to minimise the risk. Because obviously if the Renters’ Reform Bill comes in, then [there will be] no no-fault evictions.

Mr Mortimer warned that tenants might also face much more stringent referencing checks as a result of further legislative changes.

‘The more laws, the better – my rents will go up’

But Richard Aylward, 64, a buy-to-let investor whose main goal is income generation, said he wasn’t worried about the crackdown on landlords.

Mr Aylward, who said he wasn’t aware of the result of the election until The Telegraph called him, said: “It’s not going to make any difference to me.”

The landlord said that his plan was to buy cheap from those fleeing the market, and that he bought a new property a couple of weeks ago.

“From my point of view, the more laws they bring in, the better, because it means more people will leave the landlord sector, there will be fewer properties available and my rents will go up,” he said.

The landlord explained: “I have no issues with any changes to the law because they still need the private rental sector, and the more they push them into the ground, the more will leave, and the remaining ones will just have higher value properties. It doesn’t make sense to do that.”

Mr Aylward said he has already stopped using Section 21 eviction notices, preferring to use a debt collection agency instead.

“With Section 21 accelerated possession orders, you have to give up your right to all past rents so you lose thousands of pounds. I just use a debt collection company, and send in the details and forget about it, and later I get my money back.”