The scramble to sell has led to a glut of flats on the market as buyer demand has softened because of squeezed affordability and concerns over onerous service charges.
Of all the London flats that came on to the market in January this year, just 45pc had received an offer by April, analysis by the estate agency Hamptons showed.
It means that landlords such as Rachael who didn’t offload their property before the May 1, when the rental laws came into force, risk becoming trapped: desperate to sell but worried about the financial implications if they can’t find a buyer.
“It’s a very live risk,” says Chris Norris of the National Residential Landlord Association. “Once you pull the trigger, there’s no way back. The clock starts ticking on that 12-month no re-let period [in which you can’t earn any rental income].”
Whereas before, landlords could serve a Section 21 “no-fault” eviction notice, test market appetite and re-let their property immediately if they couldn’t find a buyer willing to pay the asking price, Labour’s reforms have put an end to the practice.
Now, landlords will have to resort to using Ground 1A of Section 8, which demands a four-month minimum notice period for tenants as well as the ban on re-letting the property for any period for a year.
Any repossession claim in which tenants refuse to leave on the agreed date also has to go through a court hearing, which takes an average of 27 weeks, according to Ministry of Justice data, adding a further hurdle to the sales process.
The Government introduced the measure to prevent unscrupulous landlords from misusing eviction notices to get rid of tenants.
But Mr Norris says the new rules have turned selling a buy-to-let property into an “irreversible” and financially risky move at a time when buyer demand is highly volatile.
“The housing market, especially in London, is not in a good shape,” he adds. “Over the past couple of years it’s not been uncommon for landlords to put their properties on the market for six months, realise they’re not getting the sale price and put it back on the rental market.”
Now, under new rules, this is no longer possible. As landlords will still have to pay for utilities, council tax and any service charges while the property is empty, there is a lot at stake if the market turns out to be weaker than expected.
The outcome could be many properties left empty for months on end when they could be filled by willing tenants.
This is ironic given the Government’s claim that reforms would improve the rental market conditions for tenants, Mr Norris says. “You could see little pockets of these properties left empty for quite a long period of time. It’s slightly perverse that a piece of legislation designed to solve this perma-crisis in housing could lead to more empty flats.”