According to an article in Landlord Today, over a third of a million landlords may leave the private rental sector as a result of being penalised by tax, red tape, rising mortgage rates as well as rising refurbishment costs. This could wipe an estimated £223.5 billion from the value of the private rental sector. Across the UK, private landlords account for 18.8% of all dwellings, which equates to circa 5.6 million homes.
Rather than addressing the housing crisis, the government has introduced a number of legislative changes to put off people investing in buy to let properties. 14% of the UK’s buy to let landlords are amateurs which is around 384,000 landlords. If this number of private of landlords leave the rental sector, that is a 14% stock reduction, therefore resulting in an increase of rental prices pushed primarily by competitive ‘bidding wars’.
This is not uncommon especially in London. We have often been involved in such scenarios with our private relocation clients. Just like bidding in an auction environment; put your best offer forward without over-stretching your budget.
Different types of private landlords
Former homeowners: Here it is not just about the money. It is about tenants who will look after the property. Many a time we have come across such landlords who have not accepted the highest bid. It is all about the tenant profile.
Professional landlords/ buy to let landlords: All about the rental return. What is the proposed rent, how long are the tenants looking to rent for and could they stay longer. If they have pets, look to add an additional charge. Minimise the amount of refurbishment. Keep the costs down. A pure business approach.
Private landlords prospects
Over the last 20 years, private landlords have increased in numbers. People have been letting out their properties instead of selling. Rental yields were high and interest rates were low.
The rental market forecast in 2023 is now very different.* There is little incentive to become a buy to let landlord. The figures don’t make sense if you are borrowing money. For cash buyers, it is very different. The old saying that ‘cash is king’ rings true today. You are appealing to sellers as it can be a quick and smooth transaction.
Private landlords and tenants need each other despite being on opposing ends of the spectrum. Yes, you can argue tenants need to find properties with low property stock levels and landlords can pick and chose tenant. However, with the rise of Build To Rents (BTR’s) the rental landscape is changing. The way of renting is becoming more ‘community’ focused which is more appealing for younger generations.
Despite that, may people don’t want to live in a large building with lots of flats and shared workspaces. Some people like privacy. There will always be a market for private landlords.
Issues looking ahead
The UK rental landscape is changing. It is becoming more corporate. With private landlord numbers reducing, they will become a minority. Like any sector, private landlords need to adapt in their mindsets. Being a landlord myself, it is not about what you personally want, it is about the market. For example, when 50% of the UK population owns a pet, you can’t just say no to renting with pets because you are not a ‘pet lover’. Just consider it.
If listing with an agent, then say you will consider pets. If you are listing say on Open Rent, tick pets considered. It will just open up a bigger market to you. Pet owners are more responsible and value a good property as a pet friendly property is hard to find. Ask to see a pet cv, which should list training qualifications for dogs and you can then see what the pets look like. You can also use it to work out how responsible prospective tenants may be.
This article was written by Russell Hunt, Founder of Pets Lets. A hybrid pet friendly property portal, offering lots of advice on renting with pets in the UK. You can create your own pet cv, browse recommended pet businesses as well as look up a growing list of pet friendly estate agents in our Empawrium. If you are relocating with your pet to the UK, have a look at our Relocation Service. We work with clients from all over the world. Pets are our four-legged children, aka ‘fur-babies’.