New research from the Residential Landlords Association (RLA) suggests that 25% of PRS landlords plan to sell at least one of their rental properties in the coming year. That’s the highest proportion ever recorded in the survey, since it became a regular research item, in 2016.
The RLA received responses from almost 2,500 private rental sector landlords and the survey also showed that some 23% of landlords noted an increase in demand for rental homes. Meanwhile, over one third of landlords said their confidence in the sector over the next 12 months was low.
Why are PRS landlords selling up?
This latest survey highlighting that more landlords are thinking of leaving the PRS, or at least reducing their investment in it, comes soon after the Government unveiled it was considering banning section 21, one of just two ways in which landlords can evict tenants.
While its right that tenants should be able to live in a rental home without fear of being unfairly evicted from their home, landlords should also be supported by the Government. Not least because the provide a large proportion of rental homes across the UK. Social housing provision, meanwhile has been declining for some years.
According to the most recent English Housing Survey, there have been more than twice the number of PRS homes in England than social and housing association stock for the past six years.
Despite that detail, the Government has continued to press ahead with rental sector reforms that many PRS landlords appear less than happy with, as the latest RLA survey results highlight.
“The Government’s tax increases on the sector are already making it difficult for tenants to find a place to live, with many landlords not renewing tenancies,” said the RLA’s Policy Director, David Smith. “Action is needed to stimulate supply with pro-growth taxation and a process for repossessing homes that is fair to all.”
The RICS concerned over PRS landlords
Separately from the RLA survey, the latest housing market survey from the Royal Institution of Chartered Surveyors, (RICS) also found reason to be concerned over the rate at which PRS landlords are exiting and planning to exit the sector.
The responses to its regular monthly survey showed that while tenant demand is on the rise, new landlord instructions are falling. This activity has been reported in successive quarters since mid-2016, the largest run of this divergence since the series began in 1998. Specifically, it noted an increase in this activity as the new Tenant Fees Ban Bill came into force, while news about the possible removal of section 21 also hit.
“Comments from contributors also suggest that the upcoming lettings fee ban and the proposed abolishment of section 21 could lead to more landlords exiting the market (coming on top of tax changes within the sector over recent years),” the latest RICS survey read.
The body added that its survey results indicate rents will rise by 2% in the next 12 months, possibly rising to 3% per year over a five-year horizon.
As you can see, it’s a worrying time for the PRS – for both landlords and tenants. The RICS suggests that a regulatory body, similar to those already in place across a variety of different industries would be a better option to help protect tenants, than the withdrawal of section 21. However, even if the Government doesn’t ban section 21, for many landlords, its clear there is still a lack of balance in its attitude towards the PRS.