It’s well-known that the private rented sector has been professionalising over the past decade. The average portfolio size has etched up in recent years and a record number of limited companies were established by landlords last year.  

So, why aren’t these businesses viewed as such by Government or policymakers? Why are landlords still lumped in as a homogeneous group, regardless of portfolio size or whether the properties are held in personal name or limited companies?

Significant regulatory and tax changes have led to a reduction of the so-called ‘hobby landlord’, those people who dabbled in property investment, inspired by round-the-clock TV property programmes promising untold riches.

With the Renters’ Rights Bill due to become law this year, plus Stamp Duty increasing for buy-to-let purchases, I expect there will be a further shake out of smaller-scale landlords in 2025, those who probably savour the ease of a savings account over a tenant complaining about a leaky tap. 

The Prime Minister famously dismissed landlords as not ‘working people’ ahead of the Autumn Statement last year, which discredits the hard work and dedication landlords across the country – both large and small – put in to ensure their tenants have a good quality home.  

At Paragon, we have focused on larger-scale landlords for many years, those landlords who operate as small-to-medium-sized businesses. Many of our customers operate sizeable portfolios and the majority of business that comes through our door is of the limited company variety, an area in which we have strong expertise. They would certainly class themselves as working people, not just generating a passive income.

In my view, the growth of landlords operating as businesses has been a force for good. 

As the professionalism of the sector has improved, so have standards. The Government’s own data highlights how landlords have improved the quality of rental stock over the past 15 to 20 years. Yes, one in five rental properties in England are still classed as non-decent, but that is down from nearly half in the early 2010s. 

Likewise, the energy performance of the sector has improved significantly over the same period and the proportion homes rated EPC A-C in the rental sector now sits above owner-occupied. Again, more to be done and legislation is likely on its way to introduce new minimum standards, but an impressive feat.

Portfolio landlords typically invest in property that requires upgrading, they improve homes. Let’s not pretend this is entirely altruistic, they do it to improve capital appreciation and rental income, plus to make their proposition more appealing to their target consumer. In other words, they act like a business. 

They generally employ people, either directly or via agencies. With more legislation coming down the line, I wouldn’t be surprised to see more compliance people on the payroll of landlord companies. We employed PwC last year to analyse the economic contribution of landlords with up to 15 properties and they found that the private rented sector supports 390,000 jobs and makes an economic contribution of £45 billion. 

This is big business and of huge economic importance, both directly but also be providing the country with economic fluidity and the ability for labour to transfer easily. 

The days of the hobby landlord aren’t entirely over, but it is certainly more challenging for them, particularly those looking to enter the market for the first time. 

As smaller landlords leave the sector, it is the portfolio landlords who are filling the void. We see evidence from our customers of portfolio landlords acquiring small parcels of properties from those who are selling up, as well as single properties that have seasoned as rental homes. 

Therefore, it is those SME landlords who will continue to provide a home for a fifth of the country’s households that require an environment that both recognises the vital role they play and encourages continued investment in the PRS.

• Louisa Sedgwick is Managing Director of Mortgages at Paragon Bank *