Investment
Watch Out Tenants Landlords Selling Up

Landlords in their thousands are keen to sell up in 2020 and contrary to popular belief this is not a good outcome for anyone, tenants, landlords and governments lose out. In this article, we consider how tough it is a tenant or a landlord, and neither has any control and both groups are don’t believe in the systemic meddling of tenancy rules.
Politicians in an election year are keen to tout the benefits of squeezing landlords all in the name of helping tenants. Tenancy agreements are revised and promises of more ‘landlord pain’ made, however, their actions are not working. Tenants are not satisfied, they’re nervous.
In microeconomics supply and demand determines the price so when there’s less supply of available rental properties, demand increases, landlords put up the rent and tenants end up paying more to secure a place to live.
Tenants on Fixed Incomes
Tenants on fixed incomes now paying more rent have less disposable income for other purchases. Their needs take priority, i.e. food stables and travel to and from work, but their ‘wants’ have now been squeezed out.
Socialising grinds to a halt, e.g. meeting friends for a drink in a bar and eating out at restaurants, plus buying the latest clothes, gadgets and other desirable items all but stops dead. Where does this leave the businesses dependent on the custom? It goes companies in the hospitality, and retail sectors struggling to survive.
In these tough times, eating in (at home) is preferred to eating out, so restaurants struggling to put bums on seats so to speak end up signing onto uber foods – the home delivery service. Unfortunately, this is a slippery slope as many restaurants fail to make the numbers work and end up insolvent.
We all know how Amazon is killing the high street, and there’s no quick solution to reverse its demise. Consumers with less disposable income will become more resourceful, and brand loyalty takes a backseat.
UK Landlords
A third of landlords say selling up makes sense. Property investors have invested their money in residential property and just like investing in the markets or a business, they need a healthy return on their investment. The ‘yield’ after-tax must make the investment worthwhile. Rising costs imposed on Landlords with additional rules and regulations are squeezing the profit and thus, ROI.
‘Ma and pa’ landlords with a couple of rental properties don’t have the deep pockets of commercial investors and in a recent survey say they are less confident about the British economy due to the Brexit uncertainty.
Evidence proves house prices have taken a hit, so many small-time landlords can not see the light at the end of the tunnel so to speak and they say their best course of action is to sell their rental properties before Britain is officially in ‘recession’ which when it happens it is predicted to last for many years. In a recessions, banks are nervous, and home loan lending criteria is stricter, so borrowers struggle to secure hefty mortgages.
Australia & New Zealand Landlords
You have to wonder about the wisdom of the more benevolent Governments tampering with rental property supply. Both the UK, Australia and New Zealand provide support to beneficiaries and this money essentially comes from the ‘public purse’.
Tighter regulations and rules have landlords in these countries wondering why they put their money in rental properties in the first place as now they can not see the wood for the trees.
Tougher rental property rules have put New Zealand landlords on notice and they too are selling up rather than going the distance. It’s worth mentioning that most landlords only have a couple of properties and they park their money in them as a form of investment for retirement.
Selling up before retirement is not what any landlord wants to do as it ends up costing them, i.e. they lose money as the saying goes: you lose when you sell.
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