Is a fair and thriving rental market simply a matter of housebuilding numbers? Or could boosting landlord confidence play a part too?
Data from the Office of National Statistics suggests that average UK private rents increased by 8.7% in the 12 months to May 2024. Our latest landlord survey too found that nearly 85% of buy-to-let landlords plan to raise rents in the next year, jumping from nearly two thirds (61%) in the previous survey last year.
It’s tempting to think these increases are purely down to a lack of supply of rental properties. The current discourse on housing, including the rental market, is largely focussed on increasing the numbers of rental properties. The new Government has confirmed its commitment to building 1.5m homes over the next five years. Rightmove reported earlier this month that Britain needs 120,000 more rental homes to be built immediately to bring rent increases back to a ‘more normal’ 2% a year
Landlord confidence doesn’t seem to have been factored into this discussion. Rent rises are not driven purely by opportunity or rising demand. Landlords have also needed to factor in higher mortgage costs, more regulations and a rise in operating costs.
Many are concerned about proposed rental reforms, in particular the uncertainty about what will happen next. While the Renters Reform Bill was dropped when the General Election was called, the new Government has still pledged to overhaul the private rented sector through a Renters Rights Bill, announced in the King’s Speech. Its manifesto proposed the immediate abolition of section 21 “no-fault” evictions to prevent discrimination against private renters and empower them to challenge “unreasonable” rent increases. The party also pledged to take steps to raise housing standards in the sector.
Our survey found that fewer landlords were feeling negative compared to the end of last year. But those who were feeling negative cited uncertainty over a change in Government and what rental reform will hold. Some were particularly worried about the proposed abolition of ‘no fault’ evictions. Several landlords mentioned anti-landlord sentiment as a problem. One said: “Everyone is anti-landlord. With the lack of affordable housing, we are the scapegoats.”
Our survey found that those with smaller portfolios, between four to 10 properties, were more likely to feel negative. But, overall, amongst landlords, there was a feeling of ‘wait and see’ about what the short-term holds, accompanied by a quiet confidence in the longer term future of the sector.
It’s vital that tenants have the right level of protection and live in safe accommodation. While no doubt there are some rogue landlords out there, most landlords take pride in what they do and simply want to provide decent accommodation.
The imperative now is to keep rents at affordable levels and retain rather than lose much-needed rental properties. To achieve this, we need to hold onto good landlords, ensuring they feel confident enough to stay in the sector rather than sell up.
There is no suggestion of an exodus by landlords at the moment. But if operating costs rise and new regulations make renting out properties untenable, we may see more leave.
At Landbay, we will continue to support the sector by providing innovative solutions that meet the evolving needs of both landlords and brokers. With our expanding product range, Landbay is well-positioned to help drive the continued growth of the buy-to-let sector.
The success of the sector is not just a housing numbers game. Landlords need to have the certainty that any reform will be fair and timely. They should be seen as part of the solution to the housing crisis and not the problem.