UK private rented sector needs drastic rethink to thrive

 

The UK’s private rented sector accounts for around 20% of all households in England. What does the future hold and what needs to change?

In recent years, the government has placed a huge onus on homeownership, with numerous incentives and assistance programmes for first-time buyers. Meanwhile, many in the private rented sector argue that landlords have faced more challenges than ever due to tax rises and over-regulation.

The UK housing market remains a hugely popular investment arena for many thousands of buy-to-let landlords, with rental demand continuing to surge. However, there is evidence that many landlords are leaving the market, either selling up or switching to more lucrative short-term let options.

Marcus Selmon, chair of Portfolio Landlords Action Network, is calling for a rethink across the private rented sector. Like many in the sector, he believes the government’s focus ignores the importance of good quality rented accommodation being available.

Good landlords versus bad landlords

Selmon believes that the current conditions in the private rented sector could be paving the way for more ‘bad’ landlords to thrive, while those who strive to comply are being driven out.

While many politicians continue to call for more regulation in the market, the question of what the purpose of this regulation should be appears not to be addressed, he says.

“We have a very unusual market made up of millions of small landlords owning less than three properties who often do not have the capital resources to deal with onerous regulations,” says Selmon.

“Many of them want to comply with the current rules and most provide homes that range from very good to OK. But if they are faced with new regulations that they cannot afford to meet then they will leave the market.”

Those landlords who already flout the rules, he says, are unlikely to comply with any new ones. These rogue landlords are also likely to see the opportunity and fill the gaps when the conscientious landlords leave.

“As more tenants are forced to occupy their properties at higher rents because they have nowhere else to go, so bad landlords will prosper,” he adds.

Improving the private rented sector

To create a more successful and thriving rental sector, Selmon believes incentives to join, rather than punitive measures and over-regulation, are the answer.

“History shows that if you want to create new conditions the carrot is far more effective than the stick,” he notes.

Encouraging more portfolio landlords to the market, who have the capital resources to invest in properties and comply with regulations, is a good starting point. This, in turn, will improve the quality of homes on offer, which is crucial when the sector houses so many people.

Selmon says increasing incentives will increase supply, giving tenants more choice and creating a market that will “respond positively to regulations”.

BBC investigates rental home shortage

Selmon is far from the only industry veteran who believes the sector as a whole needs to see some changes. The BBC is working with property agency membership group Propertymark to look into the shortage of stock in the market.

Amid claims that growing levels of regulation are putting landlords off, Propertymark believes the government must act now to protect both tenants and landlords.

Nathan Emerson, Propertymark CEO, said: “Through our contacts we have been offered the opportunity to put this issue onto a national platform and present our side of the story.

“The housing system needs a balance of tenures, and the value the private rented sector brings must not be underestimated. Landlords provide much needed homes and the country cannot afford to lose them.

“We have an immense opportunity to get some solid evidence in front of decision makers and huge media outlets.”

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UK private rented sector needs drastic rethink to thrive

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