Fears surrounding compliance could spark a shortage of rental stock

Property Reporter
12th October 2021
To Let 556

The majority of landlords want to grow their portfolios and improve their tenants’ living experiences but are deterred from investing because of rules, regulation and compliance, according to newly released research.

The findings, from rental software company, Ark, found that 77% of landlords want to invest in more homes and grow their portfolio, with ambitions to build better tenant relationships (39%), offer good quality homes (48%) and encourage a fair rent for tenants (44%).

However, their efforts though are being hindered by compliance, with almost a quarter of those surveyed (23.2%) fearful of growing their portfolio – almost 3 in 10 say that they won’t invest further because they believe the rules and regulations are ‘stacked against’ them.

The survey was independently carried out on behalf of software rental company Ark – whose technology is helping landlords to compliantly manage their portfolios – upholding the quality of UK rental stock and mitigating anticipated shortages.

Angus Reid, Ark’s head of partnerships, explained: “Right now the industry is at a pivotal point; we have smaller landlords quitting the sector because of compliance and because of the rise of institutional investors. That negatively impacts stock that is already in short supply.

“While it’s imperative that rules and regulations are in place to protect landlords and their tenants, the system can create headaches that take time and money away from better tenant experiences, and ultimately deters landlords from investing in more, much needed rental homes.”

The solution for many landlords is investing in agency support, with a high proportion of respondents admitting to spending thousands per annum on fees to help them meet compliance; 56.4% of landlords admitted to paying agents to ‘ensure that they are compliant’, with more than a third paying between £1,000 and £2,000 per year.

More than half of those surveyed cited that they use a letting agency ‘because they are better placed for handling compliance’, while a staggering 71% of landlords admitted that the only reason they use an agent is so that they ‘don’t get caught out by changes in regulation’ and 65% ‘don’t see any other added value’ from their agent relationship beyond the help offered with compliance.

Angus comments: “The feedback in this survey demonstrates that thousands of pounds per year is being spent with agents to handle simple things, purely because landlords are fearful of falling foul of the rules. For those who do decide to handle it themselves (57%) their time is consumed by the process; something has to change so that tenants aren’t impacted and so we can ensure there is a healthy pipeline of brilliantly designed homes consistently available to rent to every type of customer up and down the country.”

The results also showed that of those landlords who handle their own compliance, almost a quarter are smaller landlords with a portfolio of one or two homes.

Angus concludes: “Such landlords can often quit the market, taking their portfolios with them. We need to ensure that there is support in place to keep every landlord, regardless of budget, resources and portfolio size to remain compliant and encouraged to invest further in their homes.”

“We hope we have an answer to the compliance issue – one which encourages more positive investment from landlords, without compromising the safety of tenants. Tools such as ours free up landlords’ time and money and ensure that homes are of sound quality for tenants across the country.”

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