For me, the argument of whether landlords are selling or not is masking the broader – and irrefutable issue – of demand significantly exceeding supply. Even if supply is maintained at current levels, there is not enough rental property.
The latest Zoopla report showed that tenant demand sits 51% above the five-year average, whilst supply is 33% below the same average. Our own landlord research highlights that tenant demand keeps reaching record highs each quarter.
There are a number of factors at play here and it’s a complex issue. Tenants are staying in their existing homes for longer, so stock is not being recycled back into the sector, the house price inflation seen since the start of the pandemic has made it even harder for people to get on the ladder, as has increased mortgage pricing since the disastrous mini-budget.
There are also broad macro societal changes at play. The population is growing and we aren’t building houses at a quick enough rate to keep pace, new household formation is being driven by older single person households who have a greater propensity to rent, plus people are renting for longer, with those aged between 45 and 64 in rented homes doubling over the past year.
I’ve no doubt that landlord sales are contributing to the issue, but I don’t buy into the argument of a significant exodus.
We have experienced a transition from smaller-scale landlords to larger operators over the past decade and I certainly think those one or two property landlords are more likely to be considering an exit, particularly in a higher interest rate environment and with additional regulation under the Renters Reform Bill. Older landlords looking to retire are also growing in number.
However, portfolio landlords who own the majority of PRS stock are in effect SMEs, they are run as limited companies and operate as a business. They often employ staff and have clear, long-term strategies for their business. They simply aren’t going to sell up because market conditions are more challenging.
Whilst I don’t believe there is a landlord exodus, I do believe that Government needs to take action to ensure those that are currently active remain committed to the sector, whilst at the same time attracting new investment in the form of the next generation of landlords.
There is little doubt that being a landlord is more challenging today than at the start of the buy-to-let market nearly 30 years ago. George Osborne’s introduction of the 3% Stamp Duty surcharge and removal of mortgage interest relief achieved its desired effect of slowing the market.
Layered regulation has made operating a rental property complex. The Renters Reform Bill and energy-efficiency changes coming down the line will only add to that complexity.
Additionally, landlords unfairly suffer from a terrible reputation, fuelled by media coverage and politician statements that focus on the poor periphery of the sector rather than the good work carried out by the vast majority of those who provide a good home at a fair price.
There is competition for capital and, for those with money to invest, other options may currently seem more attractive – a savings account won’t call you at 2 in the complaining about a broken boiler.
There are positive signs that new money is coming into the PRS. The average age of a landlord buying a buy-to-let mortgaged property last year was 43, and there were over 100,000 purchases according to UK Finance numbers.
However, the PRS is already under huge strain and cannot afford to shrink in size. That requires a Government fiscal policy that doesn’t penalise property investment, but instead encourages it.
It calls for a stable and proportionate regulatory environment and the recognition of the role of landlords in supplying the properties one in five of the population calls home. We will continue to make these points to the Government.
* Richard Rowntree is Managing Director for Mortgages, Paragon Bank *
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All I can say is that 50% of those applying for rooms with me or because theirlandlord is selling
Exactly!
BLINKERED!!!
Mr Rowntree... Wake up, you're kidding only yourself.
What an utter load of poppy c0ck, do they honestly think if they keep repeating such incorrect mantra: some might actually fall for it, in the hope they'll retain their ever reducing business!
They know as fact this exodus is well underway.
All very strange, what to believe. Not!
As we have a close family friend, estate agent, who stated their concerns last year, so, as far as I'm concerned - this post is merely further garbage.
Knowing as fact how they can readily check from the usual sources to know how many have left, but that's to easy - especially when you can manipulate in posting cr@p like this!
Dear me, landlords are taking so much unbelievable sh!te from so many different angles, let alone all the usual tr!pe/sh!te we've put up with from government, politicians and the usual septic anarchists in shelter & gen rent et al.
Altho, it makes me laugh the damage caused from the latter lot, as they've created more homelessness then anyone else, yet they'll never accept it...
I think you probably need to do a bit more research into LLs selling up and moving on because all the LLs I know and have spoken to are moving out of the sector.
Government and Councils are constantly hammering nails into the PRS LLs and are obviously too dumb to realise the massive issue that is starting to gather pace with regards homelessness.
They don’t have properties to put people and families in. They are not building anywhere near the required properties.
Every other week there’s a new anti LL paper coming out.
Let’s see what gets said on here about staying or leaving the sector.
I, for one am selling up as fast as possible.
I certainly don’t need the grief any longer for less and less ROI
So they are making a judgement across the board because of their limited knowledge of their own portfolio of landlords who don't happen to be selling at the moment? 🤔
I wonder if they have asked every single one what their plans are or if the area they are in is relevant ie perhaps they are higher end rentals and therefore have a higher earnings which won't be affected as much.
Tell me why my tenants are sitting tight despite me issuing an S21 notice, saying that they cannot find anywhere else to live. I checked Rightmove and there were only 2 similar properites to mine within 20 miles across 3 towns, in the whole area, and being offered a more than they couuld pay. I have abandoned my plans to sell for now as I would not want to see them homeless and let them stay while increasing the rent.
Well done you, I have given a choice to my good tenants and they have both opted to pay more rent, having one last one to ask and the others I will sell when the market is better for sellers
The data overall isn't great but if you're only looking at your own portfolio landlords then you have a very limited view.
There's a huge number of landlords with 1 or 2 properties and more than 50% of the market doesn't have a mortgage.
I can see that for now portfolio landlords will sit tight but what about those small-time landlords?
S24 and s21 are the final nail in the coffin for a lot of landlords. Dividend yields are above property yields and with the benefit of leverage pretty much gone, why bother?
Very good point about LL's with no mortgage. I do not believe the author of this bulletin. PRS is definitely in decline. With interest rates up, less profit for investors being one factor for new money. Stagnation fears in property prices being another.
With Section 24 affecting those of us with mortgages and the threat of 40% CGT on the horizon, currently is massively effecting this market, imo.
Yes, some LL's may buy in a newly formed Limited co. but I think that will be the smaller figure to those selling!
Let’s factor in Labour’s plans re the sector, fixed term contracts converted to periodic. Tenants break clauses, plus the inevitable rent controls. Capital gains upto possibly 40%. See what’s happening in Wales and Scotland. Not easy.
Plus probably National Insurance payable on rental income.
Haha laughable.
Go on a fb landlord page its nothing but sales.
I've just listed 2 more.
Time will tell.
Can the last landlord in the PRS switch off the lights on their way out.
Don’t agree you are talking rubbish drumming up your own Business.
While you agree there is a shortage of supply you don’t say more than 200’000 landlords have quit and more exiting every day now considering it myself after 44 years because of on-line money Rogue Regulators.
Thousands more have switched to AirBnB but that doesn’t reflect in Sales figures because they didn’t sell but have still Left the Market.
Ok so you think 100’000, 43 year old useless on-line money Digital Academics kids who are not able to do anything with a Property is a replacement for the hundreds of thousands Traditional Landlords who built the Business now unfairly targeted and driven out.
PRS lettings started based on Section 21 part of the 1988 Act the very foundation of all Private lettings that’s 35 years ago before which there was no lettings, so now the morons are Removing the Foundation.
So it’s not 30 years ago Buy 2 Let only started in 1996 and damaged the Sector before that we had Commercial Loans @ 8% approx not stupid B2L at 1% or 2% at the same time abolishing all savers.
We are now required to learn how to do it and a load of Virtual internet on-line money Courses after all those decades being Landlords, its a shame we were doing it before they were born, when are they going to re-invented the Wheel ?.
Absolutely correct Michael, as I have said here before I am seriously considering moving all 11 of my properties into Airbnb as it seems a lot less aggravation and more lucrative. Been involved in property now nearly 25 years and don’t need anybody telling me how to run it.
Most landlords will plan an exit over a number of years. So the physical exodus will show up only over time. However, I would suggest now the the Renters Reform Bill is now out there, a surge of landlords leaving will quickly to develop.
Sales of some rentals may wait until the Bill is enacted, to see if things turn out as bad as we are predicting.
In the knowledge we can still evict if we want to sell.
By which time selling prices may be firmer (should be in the long term as not enough homes being built and numbers of households still increasing for several reasons).
And when we know plans of a new Govt. after the general election for the PRS.
Also, I recall seeing something about CGT possibly being fairer with a different Government: wish I could remember the details.
Another foolish manager who can't see the titanic approaching an iceberg. He won't be able to recover the mortgaged properties which will bankrupt his bank.
I know 3 landlords personally… all 3 are reducing their properties and 1 is considering selling everything 🆘🆘 so they need to look deeper.
I think The Renter’s De-Form Bill shouldn’t only apply to New Rentals or Buy 2 Let New Purchases therefore should not apply Retrospectively.
Moving the Goal Posts after the event, go on then I dare you if your Bill is Fairer see how many will Purchase…
Paragon is a very specific lender with a very specific pool of borrowers. They're the lender you go to when you've outgrown the more mainstream lenders such as TMW.
I have mortgages with both and would very much like to remortgage an HMO later this year to one of them. TMW would be the preference as they have 35 year terms and allow overpayments. However, they are unbelievably picky about unsecured debt and don't seem to be capable of scaling up for multi property portfolios. They don't seem to know what their criteria is in terms of credit utilisation rates. As it would be insane not to use a credit card due to Section 75 protection, it makes TMW tricky to use for remortgaging. On that basis it's likely that remortgage will go to Paragon, purely because they seem to have a better understanding of bigger numbers. I did a couple of remortgages with them last year and they were very good to deal with. The fact they will deal direct with the customer and don't insist on having a broker involved also makes them attractive to portfolio landlords.
So why is supply 33% down if nobody is selling
I think not too long ago Paragon withdrew from many Mortgage’s products, as for the TMW, I had dealings with them cost me £5k it shouldn’t have and then wanted to give me £8k penalty for paying it off 2 weeks too early, they are also a part of Nationwide who supports Shelter.
I am still scarred by my experience as a landlord pre section 21 back in the 1970/80s and believe any property owner looking to let a house, a flat or even a room after the renters reform bill is passed should be sectioned under the mental health act.
We have been landlords for over 25 years and never contemplated selling any. We also ran our own letting agency for 10 years before selling to an investor.
We are now seriously thinking about a complete exit over the next 3/4 years.
We’ve worked way too hard, offered excellent properties in first class condition only to be “dictated to” by the Scottish Scottish Government!
Well … not on our watch, I’ll leave the problem with you!
Thankfully I don't operate in Scotland.
UK Govt. wanted to try to reverse the retirement of (often older) workers who 'retired' early during the pandemic: as they found it has affected UK productivity. But Govt. found they couldn't do much about it. Just handwringing.
Now they are going to find same problems with older LLDs, and those who are a bit younger but also find they don't have to work. Who can sell up and live well, with less hassle.
This time, they'll only have themselves to blame.
While reversing the mistakes will be in their control, even if they thought enough to do so, it will be too late.
At least early retiring LLDs won't face the problems tenants will: far less supply, increasing rents (until rent freezes are tried) etc.. But at least we'll get some reward for hard work.
Best wishes: enjoy your retirement if you choose it. And be content that you are in the right!
Same here. I'm getting out. Also in Scotland 🏴
David, you are right to be scared we know what’s coming we had it all before.
Also for Londoners ULEZ booklet through our door today message from Mayor Khan, packed with lies he says 9 out of 10 vehicles see driving in outer London today are Compliant and most people will not have to pay the Charge, it not what I see every day I see probably as many that won’t comply as do, I see as many diesels older than 6 years as newer.
Ok if I believe him and 9 of 10 are Compliant why is he introducing it at all.
I thought no one could give Mr Johnson, Mr Gove or Andy Burnham a run for their money but this guy is something else.
We know about pollution and Mr khan has doubled it, blocking off roads, narrowing roads, no through roads, 20 mph top speed, doubling journey times bringing London to a standstill, for the excuse to do this. There’s an old saying we can’t live on fresh air.
I think you miss the point on the net effect. The PRS was growing at 150,000 units a year every year before Osborne started his antics in 2015, since when it has been dropping by what is now 100,000 units a year and picking up pace. Thats a hole of 250,000 units a year when net migtation is 500,000+. The PRS may not disappear overnight but what was 4.6m households would have now been 5.5m and needs to be 7m, instead of the 4m its about to become. Thats a 3m unit whole that is driving up rents the way it is and its about to get a whole lot worse on Thursday when HMG tell us net migration for the last 12 months is rumoured to be 900,000+.
Matthew, agree 100% and it’s the Government, Regulators, Tax hikes, S21, S24, Selective Licensing, Additional licensing, Mandatory licensing, Reduced allowances, Periodic Tenancies without end so when you fall out with your Tenants or relationships break down which is now encouraged by giving the Renter far more rights than the owners etc, so leaving the owners with no means of recovering vacant possession of his Property and only option is to sell to make a bad situation worse. The landlord is out and so is the Tenants creating impossible business model.
Here is some actual evidence of LLDs leaving/not investing (extracts from longer article from Mail online 22/5/23 found on This Is Money):
"The proportion of new homes sold off-plan in England and Wales has dropped to its lowest level in a decade.
A total of 34 per cent of new homes in England and Wales were sold before they were built last year, down from a peak of 46 per cent in 2016. It is the fifth time in the last six years that the proportion of new homes sold-off plan has fallen, according to the research by Hamptons.
The estate agent attributed the decline to a fall in the number of landlords and property investors, who it said are the most likely group to buy off-plan.
It claimed that the decline can be traced back to 2016 and the introduction of a 3 per cent stamp duty surcharge on second homes.
The surcharge made it far more expensive for those who already owned a property to buy a second home or invest in a buy-to-let.
In 2015, 70 per cent of off-plan buyers were investors, a figure that fell to just 12 per cent in 2022."
Thought I might have seen this also reported on Landlord Today, but so far not.
It is on Houseladder, online, today.
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