Half of tenants vacating a property last year had to do so because their landlord wanted to sell their property, according to a new survey. In the latest Rental Confidence Index report, published by PayProp – an automated rental payment and client accounting platform, ‘Landlords selling the property’ was cited by 50% of property professionals surveyed as the primary reason for tenants moving.
By contrast, eviction was cited by just 11.3% of those surveyed. Tenant rights organisation Generation Rent has warned about the major impact of landlords selling up on homelessness.
Sold properties lost to the PRS
The survey also found that more than 54.5% of landlords were in the process of selling properties last year at the time of the survey. PayProp UK managing director Neil Cobbold said: “We know from our survey that the majority of homes sold by landlords (66.7%) are purchased by first time buyers. So, every time a landlord puts a house up for sale, it will generally be permanently lost to the Private Rented Sector (PRS).
“These buyers are generally also the more well-off tenants who are best equipped to deal with the steep PRS price increases we are seeing. That loss of stock and well-financed tenants puts the PRS under pressure, with fewer homes to rent and lots of pent-up demand from less well-off tenants, which in turn can lead to higher rental prices as they compete for the remaining properties.
“The question we should be asking is ‘Why are so many landlords selling properties?’”
Feeling squeezed?
“One reason may be the age of the average landlord, which according to the latest English Private Landlord Survey was 58 in 2021. By now, they may be thinking about retirement and taking the money they have invested in property as an annuity.
“However, in other cases, a lack of profitability will be an issue. A number of factors – an absence of tax reform to address mortgage costs; higher buy-to-let mortgage rates; increased regulation: and the headlines around the abolition of Section 21 evictions – have all combined to make life uncomfortable for many landlords.
“If this trend towards fewer PRS properties is going to be reversed, the Government has to find a way to keep landlords in the PRS and encourage more investors to join the sector. If not, supply will remain under pressure and rents will continue to rise, making life more difficult for tenants who are already feeling squeezed.”
The government heralded their Renters (Reform) Bill as the most radical reform of the PRS in a generation, and it has dominated coverage in the trade press.
Among its proposals are:
- Removing Section 21 evictions once the courts have been reformed;
- Converting the majority of PRS tenancies from assured shorthold tenancies (ASTs) to periodic tenancies;
- Introducing additional grounds for possession under Section 8;
- Allowing tenants to appeal rent increases at a first-tier tribunal;
- Establishing a new Ombudsman to provide binding resolutions in tenant/landlord disputes;
- Outlawing blanket bans against families and tenants that claim benefits;
- Creating a new Privately Rented Property Portal that landlords must register with and where they must prove compliance with laws that govern the PRS;
- Giving tenants the legal right to request leave to keep a pet;
- Digitisation of the court process and other overhauls to reduce waiting times.
But despite passing its Third Commons Reading last month, the proposed legislation has failed to become law after an early election was called. Instead, the industry expects some of the measures within the Bill to become part of most mainstream parties' manifestos.
Expertise on hand from agents
Given the scope of these changes to the PRS, it is not surprising that the vast majority of respondents (97.6%) were aware of them. There was also a significant drop in very negative sentiment about the current state of the industry (down 13.1% on 2022), perhaps because of the amendments to address the Bill’s perceived imbalance between the rights of the tenant and those of the landlord to gain repossession of their property.
The largest group expressed a ‘neutral’ view (46.8%). However, with the upcoming changes to the Renters (Reform) Bill, the survey found that property professionals were a little more optimistic about the future of the PRS than in 2022. More than half (51.6%) felt either positive or very positive about the rental industry’s prospects.
Even so, fewer respondents could see themselves working in the sector in five years’ time with 12.9% saying it was ‘unlikely’ or ‘very unlikely’.
PayProp’s full Rental Confidence Index 2024 can be read here.
