Property supply to lower end of PRS – Julie Rugg thanks Property118 contributors

Last year, we sought help from Property118 to make contact with landlords who were willing to help us with our research. We were overwhelmed with responses, and I am here taking the opportunity to thank everyone who got in touch.

Our research aimed to understand whether there is a sustainable supply of property to the bottom end of the private rented sector. To answer this question, we needed to get a better understanding of the landlords who routinely let to people on lower incomes.

We interviewed 55 landlords, who very kindly talked about their financial and management decisions in a great deal of detail. The insight gained from the interviews has told us a number of things.

The research underlined the fact that it’s always a mistake to generalise about ‘small’ landlords. We were able to interview landlords at different ages and at different stages of portfolio development. We have been able to refine a classification of landlord types that will make it easier for us to understand the impact of a range of different types of policy.

It is clear that the size of holdings is not necessarily a great indicator of professional intent. Many highly experienced landlords have been selling down and now own just a small handful of properties. At the same time, it was also possible for landlords to expand over-rapidly without necessarily acquiring the expertise to manage their portfolios.

Investor landlords often brought their own workplace competencies to letting property. Portfolio landlords were often running as effective small family businesses.

It is clear that landlords do not regard the lower end of the PRS as a single market. Landlords have preferences amongst lower-income tenants. There are parts of the country where rental stagnation means that the local housing allowance is relatively competitive and where low house prices make for attractive yields. Some landlords were targeting this opportunity and expanding their holdings in these places.

The introduction of Universal Credit had an impact on landlord letting preferences. Some landlords were stepping away from this market, largely because of problems with securing direct payments and because of the loss of a valued working relationship with the local housing benefit office. In other cases, landlords were more actively targeting tenants whose vulnerable status guaranteed a direct rent payment from the offset.

The report concluded that, for much of the country, the supply of property to tenants in receipt of housing benefit is diminishing. This reduction is compounded by the fact that a generation of ‘baby boomer’ landlords is now ageing its way out of the market and is not being replaced at the same rate by younger, new landlords.

It has not been possible to cover all the findings in the report here. Find out more about the research, including a copy of the report to download, at:

https://www.york.ac.uk/chp/news/2021/rented-sector-supply/

Julie Rugg, University of York

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