Following the recent government rental reform, research from Total Landlord Insurance shows that 79% of landlords say they have no plans to increase or decrease their buy-to-let portfolio in the near future. The research showed a further 17% of landlords said they planned to reduce the size of their portfolio due to the government’s latest plans to reform the rental sector. The Department for Levelling Up, Housing and Communities recently changed the renting rules to ban ‘no-fault’ evictions and make it easier for tenants with pets to rent a property.
The change comes as recent research from Propertymark revealed that the average number of available rentals on the books of letting agents has fallen 50% from 30 to 15 amidst continuing supply and demand issues. This is leading to soaring prices, with Rightmove’s annual rental survey finding that rents are up 11% year-on-year to a staggering £1088 per month outside the capital.
In a move to aid renters and their rights, a new property portal has also been introduced, allowing tenants to view information about their landlord’s obligations and be able to hold them responsible for these – a move intended to resolve problems early and reduce court battles. Renters’ rights will also be strengthened in relation to health and safety, aligning the sector with the Decent Homes Standard and intending to eliminate a number of common hazards. Michael Gove, Levelling Up and Housing Secretary, justified the change by saying: “For too long many private renters have been at the mercy of unscrupulous landlords who fail to repair homes and let families live in damp, unsafe and cold properties, with the threat of unfair no-fault evictions hanging over them. Our new deal for renters will help end this injustice.”
Capital Economics has forecast that gross rental yields for landlords will hit a new low of 4.26% by the end of 2022, due to house prices climbing quicker than rents. Adding to this, landlords bought more homes in the first three months of 2022 than they sold, happening for the first time since 2016 according to Hamptons. There are now several obstacles facing potential buy-to-let landlords with the recent introductions of rental reforms potentially threatening the sector.
David Hannah, Group Chairman at Cornerstone Tax discusses:
“In terms of the recent rental reforms, I am in favour of rogue landlords being driven out of the markets, but there are also good landlords who have bad tenants that need to be considered. The most important thing is to balance tenant rights against tenant obligations and ensure that landlords keep some of their authority.
“There are cases in which properties have been damaged and tenants refuse to let their landlord inspect the home, or where rent has not been paid for a considerable period of time, for example. I welcome the recent change of the renting rules, and agree tenants need protection, but landlords ultimately need rights too.
“I think the rental market is filled with uncertainties at the moment, with rising rents making it less attractive from a renters standpoint and rising house prices making it less desirable for buy-to-let landlords to grow their portfolios.”
