The next prime minister, Boris Johnson or Jeremy Hunt, will almost certainly face a housing crisis if the government does not rethink its plans to impose yet further regulation on landlords.
The National landlords Association (NLA) warns that a housing crisis is “a racing certainty” if landlords are forced to exit the private rented sector as a result of the government’s plans to change the regulations - such as the proposal to abolish Section 21 of the Housing Act.
New research from the NLA reveals that 86% of landlords consider it “very likely” or “likely” that they would exit the private rented sector if the government presses ahead with controversial plans to make it harder to evict tenants.
This comes in the wake of separate NLA research that found that landlords are pessimistic about the future, with the proportion rating the prospects of their own lettings business as “very good” or “good” falling from 65% to 37% over the past four years.
According to a survey of NLA members, almost half - 46% - of landlords have invested in property in order to substitute or supplement their pensions. Many did so after pension saving became a liability following the Labour government’s controversial £10bn-a-year pension fund “tax grab” and a series of high-profile scandals involving pension schemes such as those of Equitable Life and Robert Maxwell’s Mirror Group.
There are rising expectations that many landlords will have to sell up in order to fund their pension. Indeed, given that just over half - 51% - of the landlords who invested in property to fund their retirement have either retired or plan to do so in the near future, then there could be a negative impact on the availability of private rented housing.
Richard Lambert, CEO of the NLA, said: “Many landlords are telling us that the latest changes to the regulations affecting the private rented sector are the last straw.
“These are not the greedy or unscrupulous people that many would have you believe. They became landlords in order to fund their retirement, but they are being backed into a corner because the government’s plans to change the regulations- such as the proposal to abolish Section 21 of the Housing Act - is making it harder and harder for them to generate sufficient income.”
“If they are left with no option but to sell their property and exit the private rented sector in order to fund their retirement, then given how many landlords are retired or approaching retirement, the chances are that there will be a sudden and significant shrinkage in the size of the private rented sector. If that happened, it is a racing certainty that the current housing crisis would get worse.”