‘Half of DIY landlords will sell up or give up after renting reforms’
So says estate agency group Dwelly's CEO, who says challenges of meeting Renters' Rigths Bill regulations will be too much for many landlords.
An estate agency group has predicted that the Renters’ Rights Bill will see half of the UK’s small landlords who manage their own properties either hand them over to letting agents or sell up, once the Bill becomes law and is fully implemented.
So say Dwelly, which claims that small-portfolio part-time landlords are finding it harder to make the numbers work.
“Mortgage repayments, maintenance, service charges, and the cost of meeting higher property standards have all increased,” says its CEO Ilia Drozdov, whose group of estate agencies now manages some 3,500 properties across the UK.
“When lettings is a secondary income rather than a main business, these pressures can quickly erode profitability,” he adds.
“And for many, it’s not about being unwilling to adapt, but about lacking the time, resources, and support ongoing systems to do so efficiently.
Uncertainty
“But a key influence is ‘uncertainty’ – regulatory changes create nervousness about future viability – not necessarily about adapting, but having the time and knowledge to do so.”
Dwelly has made the predictions on the basis that ONS figures that show 50% of landlords do not use a letting agent and estimates that by the end of 2026, 30% of these independent landlords will revert to using agents for guidance and management, and 20% will sell their properties to bigger landlords, based on its conversations with estate agency owners.
“The other half of independent landlords will very likely stay independent and cope with the new Renters’ Rights Bill conditions and burdens by themselves,” he adds.
Read The Neg’s recent interview with Drozdov.
The admin is one thing, but many landlords are going to give up through sheer financial pressure, or the fear of it. Under the RRB all it will take is one bad tenant refusing to pay rent, and landlords are facing a year or more to evict them via Section 8, the courts, bailiffs, and Councils telling tenants to stay put to the last moment – a year in which the landlord still has to pay the mortgage and other costs, maintain the property, and prepare to deal with all the inevitable damage when the tenant is finally evicted. Most small landlords cannot survive such financial damage.
The RRB, together with Clause 24, 5% extra stamp duty, MEES, EPCs, CGT increases, interest rate rises, maybe NICs too etc. is fundamentally changing the risk-reward profile of the PRS. There is going to be a mass exodus by small landlords, and I can’t see anyone willing or able to replace the lost rental stock at scale. The build-to-rent boys just cherry pick, housing associations are focused on maintaining their ancient stock and won’t even buy massively-subsidised S106 new-builds, let alone take on more liabilities from small landlords. Much of the mainstream rental sector is becoming a disaster area.