0:04 AM, 10th August 2023, About A year ago 8
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The government needs to act fast to prevent a housing disaster, with more people renting than ever before and fewer landlords willing to invest in rental properties, one expert says.
Neil Cobbold, the managing director of automated rental payment firm PayProp UK, points to an analysis of HMRC data by accountancy firm UHY Hacker Young.
It reveals that the private rented sector (PRS) lost 116,000 properties and 70,000 landlords in 2022.
Zoopla also reports that 11% of homes for sale in the UK were previously rented out.
Neil says the sector can bounce back and become stronger than ever – as long as the right incentives are in place.
He explains: “The private rented sector has been under the government spotlight in recent years and there is no doubt that this may have contributed to some landlords leaving the industry.
“While we welcome measures to improve the quality of housing in the PRS and strengthen tenant rights, we also believe that more could be done to both incentivise landlords to remain in the sector and to attract new investors.”
He adds: “It has been widely discussed within the industry that the reversal of Section 24 may be such an incentive for landlords to remain even with more regulation.
“Being allowed to deduct mortgage payments from rental income before tax would make a huge difference to landlords’ bottom lines.”
Along with rising interest rates, tax changes and regulatory reforms, landlords are finding life harder – and less profitable.
Meanwhile, many potential first-time buyers have been priced out of the market by higher mortgage rates and stricter affordability criteria, increasing the demand for rental homes.
This imbalance has led to record-high rents across the country, putting more pressure on tenants and landlords alike.
The PRS currently houses five million households, or 19% of all households in the UK.
Neil warns: “Other government measures criticised by landlords are the proposed changes to the Minimum Energy Efficiency Standards (MEES) regulations.
“By law, all residential rental property must have an Energy Performance Certificate (EPC) rating of at least an ‘E’.
“The government has recently proposed that this be stepped up further to a ‘C’ or above by December 2028.”
He adds: “The measures required to achieve this new standard could prove to be too expensive for some landlords.”
Neil says the government has a responsibility to ensure that the PRS is a viable and attractive option for both landlords and tenants.
As such, it needs to find ways to encourage more investment in the sector, while also protecting the rights and interests of renters.
Among the measures the government could and should consider, Neil says, include:
He also says that alternative models of renting, such as co-living, build-to-rent or community-led housing, that can offer more choice and flexibility for tenants and landlords should be promoted.
He continues: “The UK has some of the oldest housing stock in Europe and the industry believes that the government should give some thought to offering financial support to landlords who might struggle to make the sometimes significant investment required.
“Extensive insulation work and the installation of new heating systems can be prohibitively expensive – especially in those parts of the country where rents are lower, and it would take far longer for landlords to see a return.”
The other factor which has hit the PRS is the lack of available housing stock – especially in places where demand is high, like the major cities.
Neil said: “While house prices are falling, mortgage interest rates remain high, so first-time buyers are having to wait longer to afford them.
“Some workers may never be able to afford to buy their own home, and some of those who could still value the flexibility of renting.
“The demand for high-quality rentals is always going to be there and the government has got to find a way to attract investors who are interested in being the landlords of tomorrow.
“The country desperately needs more, newer, greener homes in the PRS – especially in areas of high population where demand has gone through the roof.”
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PRS could be damaged beyond repair warns industry body
rebecca anelay
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Sign Up13:41 PM, 11th August 2023, About A year ago
Reinstate section 21 and I'll halt the sale of 3.....nothing else will make me stay!!!
Jimmy Smith
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Sign Up5:06 AM, 12th August 2023, About A year ago
The governments aim is to destroy the PRS they couldn't care less about tenants, so the governments aim is all going to plan.
Russell Cartner
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Sign Up6:04 AM, 12th August 2023, About A year ago
The PRS sector is stuffed because of HM Government Lefty Shelter and Generation Rent battering it. Even with Sec 21 it is not easy to evict a tenant but without it virtually impossible and mega expensive. You will probably have to sell afterwards to cover your losses
Judith Wordsworth
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Sign Up12:42 PM, 12th August 2023, About A year ago
Shame we landlords didn't follow my suggestion when the Renters Reform Bill was first published - ie for ALL PRS landlords to issue s21 notices on the same day with the same expiry date.
No need to follow through but would have made the powers that be sit up and consider where the hell they would have put 4.7 million renters!
Stella
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Sign Up14:00 PM, 12th August 2023, About A year ago
Reply to the comment left by Russell Cartner at 12/08/2023 - 06:04
The removal of section 21 will see many of us running for the hills.
The loss of section 21 is the worst possible thing that could happen to the PRS and will put prospective tenants in a precarious position when trying to find somewhere to rent.
I will be gradually selling up.
AnthonyJames
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Sign Up23:23 PM, 12th August 2023, About A year ago
I would add to this list:
1. Create a national register of tenants, with clear criteria for entry and exit, and a system of penalties for non-compliance or misconduct. That will help create a blacklist of nightmare tenants and provide a strong motivation for them to change their ways.
2. Allow CCJ debts to be collected through the tax system and made repayable for a person's lifetime. Self-employment and bankruptcy should not be free get-out-of-jail cards for debts that are relatively minor compared with a business failing, but are a big deal for creditors like landlords. The current CCJ system is broken and virtually unenforceable.
Ray Lancaster
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Sign Up11:28 AM, 13th August 2023, About A year ago
Ha ha less profitable? Many landlords will have little profit, no profit or even be making a loss.
Paying for this paying for that , EPC upgrades, more tax gas and electrical certificates etc. If you are a leaseholder with a flat or flats £1000’s of pounds extra in maintenance and insurance charges due to the Grenfall tower tragedy . I have a large number of properties and am working my way through selling them as it’s just not worth it anymore with all the hassle and the incoming tenants reform bill. Have lost tens of thousands pounds over the last few years having to evict a few tenants through huge arrears and legal and court fees. Oh the stress!
Everyone apart from landlords thinks it so rosy being a landlord .
I’m off to Sunny Spain and leaving overcrowded Britain because it isn’t Great anymore!
Russell Cartner
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Sign Up11:44 AM, 13th August 2023, About A year ago
Reply to the comment left by Ray Lancaster at 13/08/2023 - 11:28
Everybody is screw the Government Lefty Loony Shelter and Generation Rent