One out of three landlords (31%) are considering selling up due to economic and regulatory challenges, new research from mortgage lender Aldermore reveals.
The shrinking of available rental properties could place further strain on the private rental sector and tenants’ ability to secure homes.
The main motivating factors driving landlords to potentially divest are high maintenance costs associated with their rental properties, and increased regulation of the sector e.g. the Renters Rights Bill (34% respectively). Recent changes to stamp duty on buy to let properties announced in the Autumn Budget are also prompting three in ten (29%) landlords to consider selling up.
Some landlords are already taking action with nearly one out of three (29%) having sold some of their properties in the last 12 months, selling 32% of their portfolio on average.
Half of all landlords (49%) report already seeing an increase in tenant demand. As more landlords exit the market, rental homes could become even more scarce.
The consequences of this are potentially wide-reaching. Nearly seven out of 10 (69%) landlords say that private landlords exiting the market would hurt the quality of properties.
The effects are also being felt among renters, as seven out of 10 (70%) who recently moved reported that it felt like they were competing with more people when looking for a property. One in four recent movers (27%) have had to move as their landlord sold the property that they previously lived in.
A smaller number of available properties could also drive-up rents. 61% of private renters are scared that future rent increases will mean they need to drastically change their living arrangements e.g. move back in with family or rent in a larger house share with more tenants.
Despite widespread negativity around the role of landlords, two thirds of tenants describe their experience with their landlord as positive (66%) and based on good communication (77%).
More than a quarter of landlords (27%) who are considering exiting the market admit they’re fatigued by the rhetoric around landlords being scapegoated for the problems facing the UK housing sector.
Jon Cooper, director of mortgages at Aldermore, comments: “Year on year, we’re seeing the private rental sector become a more challenging environment, for both landlords and renters. Increased regulation, high mortgage rates and high maintenance costs mean more landlords are unfortunately being squeezed out of the market. This in turn is impacting renters who are dealing with increased competition for properties in addition to higher rents.
“Our data shows year after year that most landlords have positive relationships with their tenants. Looking ahead, we must ensure that the private rental sector remains a viable environment for landlords to operate in, as a continued exodus will place greater strain on an already stretched sector, further impacting tenants. Aldermore welcomes the Government’s efforts to increase transparency within the sector and recognise the role that good landlords play through the Renters’ Rights Bill, but this must be done in a way that is proportionate and does not create undue additional strain on landlords.”
