According to the Simply Business Landlord Report, which scrutinises the feedback of 1,455 UK landlords, a substantial shift is looming on the horizon: despite an upswing in the demand for rental homes, one in every four landlords is contemplating selling at least one investment property within the forthcoming year.
This decision doesn’t seem impulsive, considering that in the past year alone, 9% of landlords have let go of a rental property. Regions leading in property sales include the South East, Wales, and the South West, while the North West, Scotland, and the East of England are hotspots for acquisitions.
The Pressure Points: Legislation and Rising Costs
The most frequently cited impetus for these sales is the ever-changing legislation, with landlords feeling the pressure from adaptations in the law. Moreover, a significant challenge glaring back at property owners is the across-the-board spike in costs. A remarkable 31% of landlords have seen their buy-to-let mortgage payments climb over the past year, and for 19%, these repayments have shot up by as much as 501%.
Yet, the sector hasn’t lost its allure for everyone. Half of the landlords surveyed still endorse buy-to-let property as a solid investment, undeterred by the current climate.
Economic Uncertainty
Alan Thomas, UK CEO at Simply Business, observes, “The landscape in 2023 is riddled with challenges from economic uncertainties, evolving regulations, to escalating costs, affecting landlords nationwide. The cost of living crisis, in particular, is unprejudiced in its impact, stretching to the buy-to-let sector.”
The inaugural UK Landlord Report underscores landlords’ perception of rising costs as the paramount threat to the rental market. Adding to this, a sense of uncertainty pervades the sector, with two-thirds (66%) of landlords lamenting the government’s confusing and frequently modified legislation as a major hurdle.
Varied Reactions to the Renters Reform Bill
A survey by Leaders Romans Group (LRG) echoes these sentiments, especially in response to the impending Renters Reform Bill. While 68% of landlords plan to hold onto their current property portfolios, and a small 6% consider expansion, those intending to sell (52%) blame policy concerns, with others pointing to economic (25%) and personal reasons (23%).
Regarding the Renters Reform Bill, landlords’ opinions diverge. A significant 60% foresee a negative impact on their roles as property investors, a stark contrast to the mere 6% who predict a positive outcome. Yet, the tables turn when considering tenant welfare — 50% of landlords believe tenants will benefit, whereas only 14% foresee adverse effects.
Allison Thompson, national lettings MD, Leaders Romans Group, notes, “The survey clearly shows that a majority of landlords remain committed to the lettings industry. However, it’s crucial that their voices are heard in the discourse surrounding the Renters Reform Bill, ensuring that amendments are made to safeguard the future of the private rental sector.”
The Road Ahead: Uncertainty and Resilience
Interestingly, despite the bill stirring concerns, a substantial segment of landlords (40%) feel it won’t drastically alter their property investment strategies. This finding aligns with earlier LRG research showing the infrequent use of Section 21 for evictions — 79% of landlords haven’t used it at all, and only 4% issued a ‘no fault’ eviction last year.
The landscape is complex: landlords are navigating through a sea of legislative changes, economic pressures, and personal circumstances. Yet, the sector’s resilience is evident, with many intending to stay the course, underscoring the need for a balanced approach to new regulations that consider all stakeholders’ viewpoints.