EXCLUSIVE BLOG: The reality for tenants when landlords sell up

Following the initial pandemic lockdown house prices rocketed.

In June 2021 prices were up 13.2% on average year-on-year. Looking like a potential temporary peak, investors were incentivised to sell their property and realise their gains while they could. We saw many landlords taking this option, asking tenants to leave once their contracts came to an end.

TWO DIRECTIONS

Properties sold primarily move in two directions – purchased by homebuyers or by investors for reinsertion into the private rented sector (PRS). Many will come back to the PRS, but the process is by no means quick. There is an extensive period of time waiting for the tenants to leave (if wanting to sell with vacant possession), preparing the property for sale, listing, accepting an offer and conveyancing before an exchange of contracts.

PROPERTY

Even after the property has changed hands there may be another period of time bringing it up to the new owner’s specs before it is listed as available to rent and a further period of time waiting for tenants to move in. Our agents have told us anecdotally that this entire process can easily extend over six months.

For tenants, the case is the opposite. Before they have even left their current address, they will be looking for somewhere new to live. And this is the crux of the issue – for a long period of time, we have a great number of renters looking for a home with nowhere for them to go.

INCENTIVES

Because incentives for investment in the PRS have diminished significantly in recent years there is not enough general supply to readily absorb those looking for a new home when large shifts like this occur. The result? The unusually high rent inflation we have seen in the recent months – up to 12.3% in Q3 2022.

Properties are finally coming back onto the market and easing supply.”

In the last couple of weeks, some of our members have been telling us that properties are finally coming back onto the market and easing supply which we’ve also seen in our monthly monitoring reports.

So, are we passed the peak? Or should we be preparing for round two? The cost-of-living crisis coupled with rising interest rates has the potential to drive another round of selloffs.

GLUT

As the glut of just-about-managing landlords come to renew their mortgages and look at their own finances, selling the property they’ve been hanging onto could be their best option to weather the coming storm. If this happens, we are likely to see another round of renters looking to move while it will be several months before properties come back on the market, if at all.