Landlords lose confidence in face of Renters Rights Bill
Fewer than one in twenty landlords have plans to increase investment in the rental sector in the short term as rising costs and regulatory confusion bite.
Half of landlords surveyed by JLL say ongoing uncertainty surrounding the Renters’ Rights Bill discourages them from expanding their portfolios, while two in five say they have been out off from investing due to high maintenance costs, according to JLL’s latest landlords survey.
“Many landlords in the private rented sector have faced significant increases to their overall costs, with tax hikes, mortgage rises, as well as continuous regulatory hurdles, which are ultimately making investment less attractive and potentially more risky,” Nathan Emerson, CEO of Propertymark, said.
Private landlords are only able to deduct 20 per cent of their mortgage interest from their rental income when calculating their tax bill, down from between 40 and 45 per cent in 2017.
At the same time, mortgage repayments – which affect the 57 per cent of landlords with buy-to-let mortgages – have skyrocketed.
“This has played a key factor in rent rises, as well as worsening the gap in supply and demand levels,” Emerson added.
Rents for new lets have risen by £221 per month over the last three years, according to Zoopla.
Damand for rented homes grew rapidly over 2022 and 2023, while the stock of private rented homes has remained broadly static due to low levels of new investment by landlords.
‘Lack of clarity’ around Renters Rights Bill
The UK’s biggest landlord, Grainger, has pointed out that while the bill will “professionalise the rental market and raise standards”, smaller landlords will “find the new regime challenging and will therefore accelerate their exit from the market, further constraining supply”.
The bill is set to increase the complexity associated with being a landlord, and give more weight to tenants over landlords with respect to the right to occupancy.
“The Renter’s Rights Bill aims to create a more inclusive rental sector – and rightly so – but without clear safeguards for landlords… we risk creating uncertainty and conflict on both sides,” Sián Hemming-Metcalfe, operations director at Inventory Base, said.
Meg Eglinton, UK residential research associate at JLL, said that there is a “lack of clarity” around the Renters’ Rights Bill.
“[It] continues to create uncertainty for landlords, many of whom remain cautious until the full implications become clear,” Eglinton said.