Why Labour’s squeeze on the PRS is creating a perfect storm

Let’s be honest, the Conservatives did landlords in the UK no favours, but Labour are delivering something that is making me sit up and think.

It appears that both political parties are dedicated to reducing the private rented sector, but I don’t think that anyone has thought about the consequences.

I tuned into the Lords’ debate on the Renters’ Rights Bill this week, and apart from the unnecessary crackdown on decent landlords, I was left asking: “Where will the displaced tenants go when landlords sell?”

This critical issue seems to be overlooked, leaving me wondering about the future of housing in the UK.

It doesn’t help that landlord surveys are now pointing to a trend of selling – and if they haven’t started doing so, lots of landlords will undoubtedly begin evicting this year.

PRS landscape is changing

For many landlords, the current climate feels like a full-scale attack as the PRS landscape changes dramatically.

We face a complex web of regulations, compliance requirements, sanctions, penalties and licensing schemes.

Section 24, with its well-documented impact on landlord finances, is just one example.

Many experienced landlords, who entered the market decades ago, will feel bewildered by the current situation.

I know I do.

You only have to read Jeremy Corbyn’s nonsense this week about bringing in rent controls to deal with landlords’ ‘excessive’ profits!

There are no excessive profits, Jeremy, politicians and councils have put paid to that.

But I’m wondering which world does he live on? It’s like there’s no need to make a profit because that makes rent expensive for tenants.

There’s no acknowledgement of why – or indeed of any knowledge about what it takes to be a landlord.

Landlords selling up

The surveys highlight that while some landlords remain committed to the sector, many are seriously considering reducing their portfolios.

I imagine that the surveys later this year will show that many have thrown in the towel.

Concerns about the Renters’ Rights Bill, particularly the proposals regarding pets, periodic tenancies and the absurd idea that tenants can hand in their notice on day one are pushing landlords to reconsider their positions.

I know of landlords who are wondering what made the PRS so toxic that long-term landlords feel compelled to sell rather than be targeted continually as bad, exploitative people.

And yet the fundamental need for housing remains.

Many tenants aspire to homeownership, but they need somewhere to live while they build their careers and save for a deposit.

What happens when marriages break down, forcing individuals to leave the family home? Where will people go?

Pressure to provide housing

Driving out private landlords will only exacerbate this trend, leaving individuals with limited and undesirable housing options – including the dreaded ‘temporary’ accommodation.

I appreciate that local councils are facing immense pressure to provide housing.

That’s not the fault of private landlords. It isn’t.

And councils targeting landlords with fines and penalties – while their own properties would shame a private landlord – also puts investors off.

Disconnect between policy and reality

Councils need the private rented sector, yet policies seem designed to undermine it – there’s a clear disconnect between policy and reality.

Many decision-makers appear to lack a fundamental understanding of how the property market, and indeed many other sectors, operate.

The call for rent controls is a prime example of this lack of understanding.

While well-intentioned, rent controls usually lead to a drop in the quality and availability of rental properties.

Just this week, Scotland has announced the end of rent controls – after being told they don’t work and the Scottish Association of Landlords saying 50,000 private rentals have left the sector.

Let’s give the SNP a round of applause!

The housing bill still has the option for councils to bring in rent caps, which means they will do so and wonder why there are no homes to rent.

Renters have less choice

For landlords who remain, demand will rocket as renters have less choice – and higher rents mean a better return for the landlord.

But this is still a risky strategy.

It means relying on market forces to counteract the negative impact of legislation – laws that will make being a landlord much more difficult and expensive.

Plus, there’s the worry about energy performance certificate regulations.

The push to upgrade properties to a C rating is seen by many as unrealistic and financially crippling.

The cost of these upgrades, which can run into thousands of pounds per property, is prohibitive for many landlords.

It’s a deal breaker for those who want to comply with the Renters’ Rights Bill but can’t face forking out £10,000 to deliver a few quid a week energy saving for tenants.

Landlords get a bad press

My big fear is that landlords already get a bad press and as a country we are potentially looking at the consequence of mass evictions.

With landlords choosing to exit the market rather than invest in costly renovations, the resulting impact on tenants, particularly families, could be devastating.

The sheer scale of the problem, especially in areas with a high concentration of older properties, raises serious questions about the government’s approach.

The Conservatives failed us and appeared to favour corporate landlords, while Labour’s policies look like being driven by ideological motives rather than practical solutions.

The result is a growing sense of betrayal among smaller landlords, many of whom entered the market to supplement their pensions.

Many of us feel that our hard work and investment is being undermined by short-sighted policies.

This is going to be an interesting year with long-term consequences for tenants, the availability of affordable housing and a worsening housing crisis.

It’s galling to think that ordinary people, many of whom will have voted Labour and admired the rash promise of ‘levelling’ the PRS playing field, will be left to bear the brunt of the fallout.

It really doesn’t have to be this way.

Until next time,

The Landlord Crusader

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