Landlords and renters’ activists are at either end of the spectrum reacting to a controversial report on the private rental sector.
Yesterday the Resolution Foundation think tank published a report claiming that no more than one per cent of landlords had quit the sector as a result of interest rates soaring and the sharp increase in costs of operating a buy to let property. The foundation dismisses concerns over the costs to landlords as “scare stories”.
But the National Residential Landlords Association chief executive Ben Beadle says: “Rising rents are a result of a range of factors. Whilst wage growth plays a role, a key driver is the imbalance between supply and demand.
“As the report highlights, an increasing number of people at all stages of their life now rely on the private rented sector. However, with demand far outstripping available supply, there are an average of 15 prospective tenants chasing every rented property, double the pre-pandemic level.
“The impact of rising interest rates and tax increases should not be downplayed. 82% of buy-to-let loans are interest only and the number of buy-to-let mortgages in arrears more than doubled in the final quarter of 2023 compared to the year before. The Institute for Fiscal Studies has said that: “the more harshly that landlords are taxed, the higher rents will be”.
“Ultimately, a healthy rental market is one in which there is a supply of rented housing to meet ever growing demand. Ministers need to act to support the sector by developing pro-growth tax measures to deliver this.”
Generation Rent’s boss - chief executive Ben Twomey - is dismissive of landlord concerns and comments: “Renters have nowhere to hide from the housing crisis. It doesn’t matter what you’re earning: if your landlord thinks someone else would pay a higher rent, then they can demand more from you, and threaten you with eviction if you push back.
“Rising rents mean we have less to put aside for the future, and less to spend on actually living. As well as building more homes and giving enough support through the benefit system, the government needs to stop landlords raising rent beyond what we as tenants can actually afford.”
The Resolution Foundation report claims rent levels for new tenancies have grown by an average 18 per cent since January 2022.
The think tank claims this has had a big effect on families’ living standards, with the number of families privately renting almost doubling in a generation – from 11 per cent in the late 1990s to nearly 20 per cent today.
Private renting is also no longer the preserve of those in their 20s. The proportion of poorer families headed by someone aged 30-49 that are renting has almost tripled from just 11 per cent in the mid-1990s to nearly 30 per cent in 2021-22.
The Foundation says that popular arguments on what causes rent rises are wide of the mark.
It says the theory that rising interest rates have pushed up the cost of servicing Buy to Let mortgages – forcing landlords to pass on these costs to their tenants – ignores the fact that landlords’ ability to pass on higher costs is ultimately constrained by the wider rental market. If it were so easy for landlords to unilaterally choose to increase rents, they would likely have done so before 2022, says the foundation.
It says there have also been what it calls ”scare stories about interest rate rises and tougher regulation sparking a mass exodus of landlords from the private rental sector, reducing the supply of available homes.” It says this isn’t true, and claims its analysis of Bank of England research shows that there has only been a very modest shrinking of the PRS since mid-2019, equivalent to just one per cent of the sector.
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One per cent ?
Sounds like they need to visit planet earth occasionally
Be fair, George, Bungling Boy Beadle could hardly admit that he has contributed to landlords selling up. 😊 As for the other Ben, he doesn’t care. 😉
What a shame they are both called Ben. If only one was called Bill, we could cast Polly Bleat as Little Weed, but only for those of a certain age. 🤣🤣🤣🤣🤣
I could take a leap and say maybe the amount exiting is just 1% (a big leap).
But whatever the real figure is, these think tanks purposefully misrepresent the data. There will always be a natural churn of landlords exiting because they’re at the selling up stage. But what is having the biggest effect is those landlords selling up are not being replaced by eager youngsters anymore as they’re all looking at BTL now as all the risk, none of the profit. Add to that, many landlords that were expanding their portfolio are now sat on their hands because they’re not generating money for the next property as quickly as before.
I didn’t see any mention in the report comparing how many new landlords are coming into the market now, compared with 5-10 years ago - that would tell a different story I’m sure,
The Foundation dismisses concerns about the costs to Landlords as scare stories.
This is totally irresponsible and inept thinking. So all the deliberate costs, levies. Licensing Schemes, Section 24, 3% extra STAMP DUTY, double C/tax that they impose on property that they cause to be Vacant by saying you can’t let without a Licence but the house was licensed for 3 - 5 years periods before and Application to re-license before existing one expired although they done their best to prevent me from Licensing by introducing metastreet useless software company to handle all Applications, you can’t make an application without a special code that they give you but they use that to control and prevent you by not issuing it until they feel like it usually after previous one has expired then you have to Apply as if you never had one.
Don’t get me started on Council House discounts. I knew a guy that was able to buy his at a massive discount.
I actually bought a relatively a New Council House (30 year old) at the time but not directly. The first woman Council Tenant bought it for £22.5k with her massive discount then sold it on after the 5 year owner requirement for £102k that’s £80k for old rope, then that purchaser in turn sold it to me for £204.5k a few years later that’s another £100k he walked away with tax free, this is all only out of one Council house and I was the only one to do updating.
Any think Tank with the Council.
All these anti landlord tenant organisations conveniently forget that BTL properties are privately owned by individuals and not the state.
These ' think tanks' really are a joke aren't they
He is right about 1 thing, LLs do hold the power - the power to walk away! LLs do not leave in a rush, but slowly over time, with momentum building. The PRS will not disappear overnight but private LLs are slowly easing away into other investments. I have another going on the market this week. I am not selling up quickly, just each time a tenant moves on. I will be out of the PRS in 7 or 8 years & with fewer new LLs coming into the PRS, things will just continue to get worse for tenants. By the time GenRent realise what has happened it will be too late to reverse the momentum.
Completely agree Tricia, my portfolio took years to grow and, though will be sold off quicker, it will still take several years. Another one will go on the market in the Summer.
Will be serving notice shortly to sell another house. That will mean 80% sold
Private landlords are being forced out in order for Corporate to take over, there will be supply high rise, System Built modular flimsily Clad foam insulation that will give off toxic chemicals fumes in fires.
They won’t be pushed around with Government on their side.
Good luck to Bill & Ben they won’t be getting affordable Rents from them and will only pick the cream, or is it Ben & Ben you’ll miss your hands on Private Landlords at your beck & call with cheap Rents. Forget about buying your own place you will not be saving when paying their high Rents and cancel your trips abroad as well.
You are right, they are taking the market away from thousands of small landlords and handing it over to the big boys.
Small landlords don't increase the rent each year, un professional, some bad some good blah blah blah.
Large organisations will primarily use block of flats, leaving the precious match box houses of England for those families that can afford it. those who can't afford the flats will use HMOs.
The sad reality is that people will get used to it. We will have increased mental health issues etc. But hey, who cares??
They can live in denial and fudge the figures all they like it doesnt change reality: where l used to get 5 or 6 parties interested in my properties when up for let, l now get 60 to 70 and 80% to 90% of those are all because their landlord is selling up. My rents have all jumped by enormous % at the change of Tenant; which is just fine by me. Supply is way down so prices have soared.
These "Think Tanks" compile data to fit a predetermined narrative.
The average age of PRS LL's is about 58-59, so many of these LL's will be looking to sell and retire over the next 5 to 15 years, this will likely be a progressive exit when tenants move out, LL will take the opportunity to sell.
Current policy is unreasonable to LL's and is not encouraging new investment or younger LL's to move in to the market and replace those retiring. If Labour get in and put further further pressure on current LL's the retirement exit will likely be brought forward by LL's who no longer want to work under increasingly unreasonable rules.
Younger potencies LL's are not interested in entering the PRS as they have no confidence in investing in the sector, given the ever charging anti LL policies.
You are right! I am getting out 10 years earlier than I had originally planned.
These are my thoughts too. I sold a house last year before CGT halved. Most LL's I know are in their late 50's and 60's. They will be all sold up within 7-10 years as they retire. Very few young LL's entering the market. Mortgage rates are high for new entrants. Legislation is prohibitive, profits are lower.
Only 1%....😂 😂 Really!!? I'm one of the one percent then... Selling them all slowly... The future is bleak for tenants... but it's not my problem any more. Scotland is a nightmare for landlords and I truly believe there will be a much larger exodus than 1% as a result of the cr*p we have to swallow.
It might only be 1% down - I don't know. However, the population has risen substantially in the interim, so they need to recalculate their figures.
Another left wing think tank fabricating a false reality and distorting evidence to suit their politicised aims. Tenants have nothing to do with their real agenda, they seek only to weaken and undermine society.
BTL is 1% smaller than it was 5 years ago…even if that is true, the demand has shot up over those 5 years, by how much? 5%, 10%, 20%? Don’t make headlines and conclusions about one side of the sum without adding in the second bit. Basic maths….
Landlords are selling up in Large number and renter are going up due to lack of supply.
You will notice that in another survey commissioned for Gen Rent (or maybe the same one) in this same article today, that they have claimed the number of families living in rented properties has gone up from 10% to 20%. So even if the number of PRS properties has only gone down by 1% (which I doubt) it needed to double to keep up with demand. And that is based on their own figures!
This bit "If it were so easy for landlords to unilaterally choose to increase rents, they would likely have done so before 2022, says the foundation." I prefer not to increase rents for long term tenants if I possibly can, as it is not in my interests for them to leave, and we are not all motivated by money above all else. Recently I've had a lot of costs including roof issues due to the bad weather as well as rising interest costs and I simply can't keep the rents low forever. I'm thinking of raising them all to LHA rates and pegging them to that. I love being a landlord, especially the bit where you take a run down property and turn it into a lovely home, and my tenants are all lovey too, but I'm already planning my exit strategy. It's been a way to supplement my pension but the hatred from Generation rent as well as the constant assumption that all landlords are unconscientious, greedy and parasitic is driving me away. My tenants know this and most are thinking of buying their homes from me. The reason they rent is because they come from different cultures and fear debt, but I've been trying to explain about good and bad debt to them and how it works in the UK. Landlords did not cause the housing shortage. It's because building costs are high and there is a shortage of builders and other trades, and also because the government has not allowed councils to invest in building social housing. This government appears to have a strategy of blaming everyone except itself and pitting different groups against each other is part of that. Things would be better if Landlord and tenant groups could work together.
Most, Good, small landlords are like you, just making a living or adding to pensions etc. The conservatives don't want you - because you are keeping their potential tenants happy and at cheap rents away from their investors.
The Labour party also don't want you - because you are making money out of people who can't afford to buy, you should be giving all your extra money you used to buy these properties to all the low life.
Either one of these two will be in power, so sell up and move your money into other investments or cities like Dubai.
I also dislike increasing rents for good long term tenants, however with rent caps etc on the way it would be silly not to do so now while we still can
Like Andrew. I have not increased rents for existing tenants. I'd rather keep nthem happy. That said I am now increasing a rent for a tenant on twice what I earn a year who is pleading poverty. If they leave, they leave.
Is it just me or do tenants these days expect instantaneous replies when contacting you, but when you contact them it can take days for any response?
AL - Regarding waiting for replies, it's the same both ways. When you send a message, you are eagerly waiting for the reply, so it seems like ages waiting. When you receive a message it's more like 'I'll get round to that soon' theirs's no urgent need to respond.
Agree
The reports are irrelevant - reality is what matters. As the saying goes, you can ignore reality but you can’t ignore the consequences of reality. Rents have gone up because of the shortage of rentals. That shortage didn’t exist 5 years ago. Spin it how you like, but this will get worse until they stop bashing landlords. Further punitive measures will only worsen life for renters.
Trying to sell another of mine but existing tenants of 12yrs finding it nigh on impossible to find anywhere else. I can see this going to court and taking perhaps 6 months to a year to resolve if i am lucky.
See the government is thinking of holding of section 21s due to so many court cases
That's the problem if you try to keep rents low for good existing tenants. When you want to sell they can't afford to rent anywhere else. I put up rents by a small amount each year like social housing does but keep them about £100 below market value. This means if you do need to sell the tenant can find somewhere else perhaps paying a bit more but they don't have to find too much more.
I don’t consider Generation Rent or Shelter to be Tenants Groups as they don’t provide any Housing not Renters either does Twomey rent privately.
He had seven jobs allegedly anti- landlord bash to further his career another Child to knows all like the other Ben I was a landlord before they were born or Rishi.
The tails are definitely wagging the dog.
Landlords can sell up and earn 6% in a savings account without any hassle, worries about rent, or what attacks Labour Government are planning- Funnily enough, I didn't see that mentioned is the obviously bias one sided report!!
It is becoming increasingly enticing to just sell my property I would take the capital gains tax hit One alternative is to keep the property and hope that inheritance tax rates are not further reduced Might all be for nothing if I go into a home
The problem for older landlords sell now and pay the Capital Gains, then your Estate likely to pay another 40% and the 24% already paid washed away that’s 64% but the remnants of the cash money you have left after paying the capital gains in the first place will taxed again at 40% is this real.. hmm I Think Tank we should be Targeted 👍
Can you transfer ownership to a relative, like a child, to avoid CGT, IHT and if you end up in a care home they can't make you sell the home to pay for your care home?
I'm wondering about putting any proceeds of mine into a pension fund in the future if it's possible to then get tax relief that way? I can then live off the state pension and my very partial teachers' pension plus my own savings and earnings as a private tutor and then pass the pension fund on tax-free if I don't need it.
I like the idea that your pension fund can be passed on inherent tax free. So putting / keeping as much as you can in your pension seems a good idea.
Its been reported that Ealing Council Staff have nicked £65k worth of Computers in the last 6 months, nice honest people to be in charge of Landlords licensing Schemes , not.
John I don’t know but I think you have to live 7 years after giving it away to be clear of it There is no difference between gifting Money or Property.
I think for a Child it would have to go into a Trust pay some tax on way-in then some Management Company run the Trust until 18 probably.
Its very hard to find out anything but there must be plenty of Landlords out there with this Knowledge come on then help John.
Around 25 yrs ago I was able to gift a 50% share of each of my properties to my wife without problem, that got me out of 40% tax, how that might work with other family members I don't know
I think if you gift property, you still have to pay capital gains tax, even if you don't pay IHT after 7 years. But I may be wrong on that.
Please don't discuss these matters on here or anywhere else online.
Please ask your accountant to give you details of a good financial advisor with understanding of property matters. They will advise you how to move properties in your name to your Ltd company. when this is done the initial value of the property is the value at which it was transferred to company (ie current value). Meaning if you off load them thereafter, your gains are negligible.
But, don't take my word for it please talk to a financial advisor.
11 sold and one more agreed today. All down to Renters Reform, S21 being abolished, S24 Taxation theft, judge rinder types making weird decisions and threats from extreme left that they will nag and nag until they can gain ownership by any means necessary.
Reality is 11 houses purposely sold to owner occupiers resulting in less roofs for families starting out. Have reinvested in more profitable and safer business opportunities
Every time Ben Twomey and Sad sack Sadiq gets quoted on here results in more homelessness
Andrew. I don’t think you need to do that anymore ? I think you can split income with wife. Although there would be no Capital gains between husband & wife if you give her property but it ends there no hope of giving it to Son or Daughter.
I knew a guy in his 80’s married's his women friend on his death bed we were good friends met in the Cafe for years.,
I visited him in Hospital she was there
he said she tricked me I’am going to change my Will. She said you won’t I’ll have you Sectioned, it was a Fine big House worth a lot. She said she wanted to move in to it with her Daughter but never did he passed away rip. She sold tax free already had a Flat in Chiswick and one in Bournemouth (nice one).
If Generation Rent or Shelter actually provided housing, I might actually listen to them. 😂😂😂 but otherwise, jog on.
£60 million to shelter to lobby the Government & run a helpline. FFS. 🤦♂️
Jahan. Sorry to see your Business ripped away from you by useless fat cats lobbyist that House no one, why should they even have a say not alone the ear of Government. I wish you well you must have nerves of steel.
Thank you Michael. That is how it feels the business that I worked hard all my life setting up being destroyed. I see similar for our fellow forum members that’s why I feel the affinity. Still got a lot more to sell but I honestly hate the idea of giving notice to long termers.
I think what they are doing to Private Landlords is a bigger scandal than the Post Office.
They have turned property into liabilities, not assets. Most people worked extremely hard to acquire the property and so it is most unfair. As it was, a huge percentage of any income went in taxation, now actual control of the property is being lost.
John I think you have to die before you are 75 it like they want rid of us 👍
I have been a managing agent for 20 years and have seen the changes in this time.......
My thoughts are as follows: (prepare for a rant).
The Private rental sector is going to hell in a handcart. All the powers that be (all political parties and pro tenant pressure groups) are so self-obsessed with short-termism that they do not want to address the root of the problem and that is for local authorities to BUILD MORE PROPERTIES.
They are relying on developers with incentives to “build to rent”, yet their rental prices are so extortionate that it does not solve the social housing problem.
Landlords are being harassed by all the “protect tenants” groups, which is forcing governments to believe in their rhetoric and responding with measures that hit landlords (section 24 taxation, section 21 removal Energy performance issues [This one currently on hold] etc. etc.) to a degree where many are getting out of the PRS market, subsequently leading to lower supply against an already higher demand as people cannot purchase property due to higher interest rates thanks to Liz Truss’ size 10s!
Simple economics thus causes rents to rise which then leads these pressure groups to insist on rent caps which will lead to even more landlords getting out of the market causing a homeless crisis the likes of what we have not seen in my lifetime at least.
Basically what I am saying is that all these “measures” set out to protect tenants are going to damage them and being cynical, I cannot believe that none of them are aware of this.
Rant over. I would welcome your comments on this.
My solution would be to reverse section 24 and remove the 3% extra stamp duty for buy to let purchases and interest rate BTL discounts so that landlords are incentivised to get back in the market, which will increase supply and relieve the pressure on ridiculous rent rises. All these “build to rent” properties to be subsidised to cater for social housing tenants and for the Government to provide enough billons to start building more Council homes and to streamline the court process so that rogue tenants (who never seem to get mentioned) are processed and evicted efficiently. Like the landlord register that is being called for, there should be a rogue tenant one too.
This is as big a crisis financially as Covid was and the amount of funds should be appropriated to deal with this. Our economy will be affected of course but people will have a roof over their heads.
I hope this does not come across as too socialist because I see the socialist rhetoric having caused this in the first place.
Frank, very good it everything they deliberately done that has brought this situation about.
So the answer is very simple reverse everything you done and shouldn’t have done to solve the housing problems you created.
I agree with most of what you say except the bit about favouring Tenants, they are the tools used as an excuse to do what they are doing, driving the wedge between us, good guy bad guy, in reality they have driven up their Rents 20/30% do not helping them either.
Helping no one but themselves filling their pockets.
Anyway keep paying the tax to keep the Benefit Claimants, plenty of them, huge numbers fraudulent.
Don’t think those 5 Romanians are the only ones but they were good at it, young people are good with the buttons.
£54m is handy money for 5 fraudsters, hats off will they get a Knighthood for exposing the sham Benefit system, never mind keep targeting Landlords to have the money available for them.
I wasn’t joking about dying before 75 to get pension pot free of tax, after 75 you are taxed. Some one will correct me.
Michael,
Spend some money and discuss these points with a financial advisor. I assume you have properties in your name. Find out how to take them into ltd company, save money on CGT etc. You can ask the financial advisor about the rules governing pension pots etc.
Pat. I have done that spent the money time & again couldn’t stomach the advice and walked away.
Nothing palatable and to go messing around with Companies at my age is not an option. I had an Ltd as far back as ‘72 taxed at 42% not 19 or 24% the prices were rubbish had to undercut everyone to get the work then slog your guts out to make a profit and didn’t the big boys keep me waiting for the money, in other words we financed the jobs for them.
I had it for years and glad to be rid of it, I didn’t Bankrupt it just ceased trading.
I had the advice over and over again, Solicitors. Accountants, Professional Valuations, I walked away as far as I am concerned there is no system jumping through hoops like a Clown no end game allowed they take all. Sad isn’t it sorry to say Why do I bother.
I'm new to this game, looks bright, lot's of landlords leaving the sector, lot's of new tenants want properties, supply and demand, fantastic!
So long as you can make a profit and the tenants pay the rent.
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