"The cumulative weight of regulatory change, layered on top of mortgage rate rises, tax reform and EPC obligations, is testing the resolve of a large cohort of smaller landlords"
- Seb Verity - Allsop
More than two in five private landlords are unlikely to continue letting their properties following the implementation of the Renters' Rights Act, according to new research from property auction and investment specialist Allsop.
The survey of more than 1,000 respondents found that 41.7% are unlikely or very unlikely to remain as landlords after the abolition of Section 21 no-fault evictions, which many regard as essential for maintaining control of their property investments. Among single-property landlords, that figure rises to 51.8%.
The findings point to a sector in the early stages of structural change. Nearly a third of respondents (30.3%) plan to sell all the homes they currently let, with a further 18% planning to reduce the size of their portfolios.
Combined, 48.4% of landlords are looking to reduce their exposure to or exit the private rented sector entirely. Meanwhile, 70.3% say they would respond to increased compliance costs by raising rents, while 23.2% would sell. Only 19.3% of respondents felt ready to meet the Act's new standards.
The research also highlights a widening gap between smaller and larger landlords. Nearly two thirds (62.5%) of single-property landlords are looking to reduce investment or exit altogether, compared to just over a third (36.8%) of landlords with 26 or more properties. Larger landlords are also more likely to hold their ground: 44% of those with 26 or more properties plan to increase or maintain investment levels over the coming years, against just 25% of single-property landlords.
"England's private rental sector isn't simply shrinking, it's also consolidating," said Seb Verity, head of research at Allsop.
"Smaller, often accidental landlords are exiting while larger, more institutional operators are selectively holding or growing. The Renters' Rights Act looks likely to succeed in its ambitions to professionalise the private rented sector and to drive up standards, which is certainly to be welcomed. Greater security of tenure and clearer redress mechanisms are a good thing."
"But the cumulative weight of regulatory change, layered on top of mortgage rate rises, tax reform and EPC obligations, is testing the resolve of a large cohort of smaller landlords, many of whom provide well-managed, good quality homes for families and many of whom seem no longer to feel they'll be able to continue doing so. This will increase the cost of renting at a time when simply too few homes are being built to meet our housing needs."
"The Renters' Rights Act represents the latest transformation of England's housing stock. Whether that structural shift ultimately serves tenants well remains an open question. Much of what it seeks to do is welcome, but in the absence of a more effective strategy in parallel to increase housing supply and affordability, it may well end up serving only to add to or compound existing housing challenges."
The survey was conducted among the client bases of Allsop's residential auctions business, the largest residential property auction house in the UK, and its residential investment team, which advises clients on buying and selling larger portfolios, including private rented sector blocks, build-to-rent and student accommodation.
