After all, you can make up or compensate for past mistakes but cannot undo them. If, having faced a crossroads earlier in life and chosen the wrong fork in the road, you cannot turn back and make the right one; all you can do is make the most of, not reverse, a decision already taken.
For me the “benefit of foresight” – the ability to forensically think through one’s options when faced with a crucial personal or business decision so that the correct choice is made – seems much better, even if it is endowed to only a fortunate few.
As to how the economy will fare once the threat of Covid-19 has receded, I have no more idea than the man, standing pint in hand, outside one of the Edinburgh bars that seem lately to have opened up to takeaway trade. Within the residential property sector, however, I am fairly sure one of the fallouts will be a return – for an indefinable period – of “reluctant landlordism”.
This term was coined in the aftermath of the 2008 financial crisis, which led to thousands of owner-occupiers, who for various personal and professional reasons, needed to move to a bigger property or to a different location. Unable to find a buyer, they had no alternative but to rent them out, albeit in most cases reluctantly.
This reluctance was easy to understand. For a start, most of those involved had little or no knowledge of the rental market and therefore no enthusiasm for the practice either. After all, their reason for becoming landlords was not to make money through rental income and capital growth but simply to keep their financial heads above water.
Another factor that came into play was psychological. Moving house is also about moving on – and still being tied to the property they had decanted from meant they were not really in a position to fully start the new chapter in their lives.
Balancing the budget
However, despite these apprehensions, the ability to rent out unsold former homes became something of a godsend as income from it usually covered – and in some cases more than covered – the mortgage payments which, of course, had to continue to be met. It meant they could still balance the family budget – and for those maxed out on credit cards it potentially saved them from financial ruin.
Therefore, anyone facing or about to face this situation should be able to do so with a measure of confidence while keeping in mind one issue that did not apply in the aftermath of 2008: “no-fault evictions”. This legislation, effective since December 2017, ended rental leases in Scotland and replaced them with open-ended tenancies.
As a result, landlords no longer had the ability to instruct tenants to leave at the end of what used to be a conventional lease period – usually six or 12 months. The tenant now has the power to decide when (or if) to leave and simply has to give one month’s notice. There are three exemptions that do permit landlords to regain possession – moving in themselves and using it as their main home; undertaking a major upgrade to the property; or selling up.
This last exemption should give reluctant landlords some reassurance about repossessing a former home once they feel the time is right to put it back on the sales market. Still, it is yet another bureaucratic “hoop” that they will need to jump through. The legislation also contained clauses maintaining the power of landlords to evict rogue tenants for anti-social behaviour or failure to pay rent through a newly constituted First-Tier Tribunal.
However, it’s become a long and arduous (and often expensive) process, partly because the Tribunal simply does not have the manpower to cope with demand. And Covid-19 has made things worse; at the time of writing there will be no new hearings until at least 9 July and all eviction orders have been suspended up to that date.
It seems a no-brainer, therefore, that vendors without buyers seek professional advice; now is certainly not the time for an inexperienced person to take on a DIY rental job.
David Alexander is MD of DJ Alexander
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