Senior figures warn over rising demand but shrinking supply in PRS
Both Goodlord and NRLA say more landlords have or are about to shrink portfolios, while tenant demand continues to be super strong.
Two large organisations within the private rented sector have warned that strong demand from renters for property and fewer landlord properties mean rents are likely to continue rising fast.
Both the National Residential Landlords Association (NRLA) and Goodlord have made the claims in separate research published today.
The NRLA says its research by Pegasus Insights reveals that 77% of landlords polled said tenant demand remained strong during the final months of last year, while a fifth said they had sold a property recently.
And the Goodlord research tells a similar story but quantifies future activity. Its poll found that a quarter of landlords intend to sell all or some of their portfolio, and that a separate survey of letting agents found that three quarters have landlord clients considering a sale.
Both organisations say the looming Renters Rights’ Bill is helping to undermine confidence among both landlords and agents with Goodlord boss Oli Sherlock (main image, left) reporting “confusion and concern”.
Tenant security
Ben Beadle (main image, right) Chief Executive of the NRLA, says that Labour’s focus on “improving security for tenants” will mean little if tenants cannot find properties to rent.
“Tenants right across the country are feeling the effects of a lack of housing across the board, including with respect to the privately rented properties. Without change, the situation is only going to worsen. We need policies that genuinely support those who provide decent quality homes to rent,” he says.
“Tax hikes which penalise those wanting to provide such homes need to be scrapped.
“What’s more, those providing homes to rent must have the confidence to stay in the market when the Renters’ Rights Bill is passed. At present that confidence simply is not there.”
The NRLA is calling for the recent rise in stamp duty for landords to be rolled back, for the Government to have a ‘clear plan’ to speed up the courts system and unfreeze the Local Housing Allowance to that fewer tenants are pushed into arrears.
The law of unintended consequences is about to blow up in the faces of our politicians.
But I dont think they understand or even care.
Its going to get a lot worse before it gets better.
Makes no sense? One day property people will wake up and realise that the reason there is no common sense to any of this (and everyone if wasting their time trying to change it), is because it is all by government design, just like open borders; its deliberate decapitalisation of the people…..ask yourself why. Luckily the USA has broken free of this nonsense and the UK will follow and common sense will return.
The Government is remarkably unconcerned about the worries of landlords in relation to the Rental Reform Act, which does nothing but penalise landlords. I can’t think of a single positive feature in the RRA that would encourage landlords to remain invested, let alone expand their stock, unless they are very lowly geared and have large portfolios. Small landlords simply cannot absorb the financial shock of experiencing a non-paying anti-social property-destroying tenant, compounded by extreme delays in eviction: three months to even start proceedings, and probably another nine months to grind through a court system that already displays extraordinary leniency towards tenants and offers a largely unenforceable debt recovery system.
Besides the RRB, the additional killers of the PRS are 1) high interest rates, which with the high price of housing in the South East in particular, means many landlords have high mortgage costs relative to their rents and are now operating at a loss, and 2) the requirement for EPC Grade C. Anyone owning an older house with solid walls is going to really struggle to achieve a C, both technically and financially, which means landlords are going to have to sell up the very properties close to town and city centres that are most attractive to tenants. As small landlords sell their older units and release their capital, are they really going to buy new properties, especially when they realise how large their CGT bills is? More likely they will use the money to reduce their mortgage debt on their remaining properties (if any) or just cash out entirely. The PRS has become remarkably unattractive now both financially and the sheet risk and hassle of dealing with tenants.
Build-to-rent operators are not going to fill they gap: they inevitably cherry-pick and are simply not interested in tenants with lower-quality credit ratings, variable employment records, children, pets, weird tastes in interior design, and as for HMOs and people on benefits, forget it. Not even social housing providers will touch houseshares, even though the benefit system will only fund a bedroom, not a flat, for single people under the age of 35.
Unfortunately you have a perfect storm brewing here, too much extra legislation all coming together at the same time. Clarification in the Renters rights bill is causing this uncertainty in the market, new EPC minimum bandings for Lettings and 5 years since the EICRs come in meaning Landlords will need to re-check their electrics to name just a few, is all too much. It would have been better if the renters bill was here under the Conservative government but it never happened and so we now have a bottle neck. All we can do is just be prepared read up on everything and be ahead of the curve.