"Increased regulation, high mortgage rates and high maintenance costs mean more landlords are unfortunately being squeezed out of the market"
- Jon Cooper - Aldermore
31% of landlords are considering selling up due to economic and regulatory challenges, according to newly released research from Aldermore.
However, should this happen, the further shrinking of available rental properties could place additional strain on the private rental sector and tenants’ ability to secure homes.
Stamp duty changes driving landlord exodus
The main motivating factors driving landlords to potentially divest are high maintenance costs associated with their rental properties, and increased regulation of the sector, e.g. the Renters Rights Bill (34% respectively). Recent changes to stamp duty on buy to let properties announced in the Autumn Budget are also prompting three in ten (29%) landlords to consider selling up.
Some landlords are already taking action, with 29% having sold some of their properties in the last 12 months, selling 32% of their portfolio on average.
Tenant demand is rising while landlords face a tough decision to stay or leave the market
49% of landlords report already seeing an increase in tenant demand. As more landlords exit the market, rental homes could become even more scarce.
The consequences of this are potentially wide-reaching. 69% of landlords say that private landlords exiting the market would hurt the quality of properties.
The effects are also being felt among renters, as 70% who recently moved reported that it felt like they were competing with more people when looking for a property. 27% of recent movers have had to move as their landlord sold the property that they previously lived in.
A smaller number of available properties could also drive up rents. 61% of private renters are scared that future rent increases will mean they need to drastically change their living arrangements, e.g. move back in with family or rent in a larger house share with more tenants.
Landlords are concerned about being scapegoated
Despite widespread negativity around the role of landlords, two-thirds of tenants describe their experience with their landlord as positive (66%) and based on good communication (77%).
27% of landlords who are considering exiting the market admit they’re fatigued by the rhetoric around landlords being scapegoated for the problems facing the UK housing sector.
“Year on year, we’re seeing the private rental sector become a more challenging environment, for both landlords and renters," explained director of mortgages at Aldermore, Jon Cooper. "Increased regulation, high mortgage rates and high maintenance costs mean more landlords are unfortunately being squeezed out of the market. This, in turn, is impacting renters who are dealing with increased competition for properties in addition to higher rents.
He added, “Our data shows year after year that most landlords have positive relationships with their tenants. Looking ahead, we must ensure that the private rental sector remains a viable environment for landlords to operate in, as a continued exodus will place greater strain on an already stretched sector, further impacting tenants.
"Aldermore welcomes the Government’s efforts to increase transparency within the sector and recognise the role that good landlords play through the Renters’ Rights Bill, but this must be done in a way that is proportionate and does not create undue additional strain on landlords.”
