The Rise of Corporate Landlords: Are We Heading Toward a Rent Monopoly?

The Rise of Corporate Landlords: Are We Heading Toward a Rent Monopoly?

7:00 AM, 11th November 2024, About 2 days ago 19

Text Size

The Rise of Corporate Landlords: Are We Heading Toward a Rent Monopoly?

There’s a new player in the UK’s private rented sector—one that’s threatening to fundamentally reshape the way tenants experience renting. As small landlords leave the market, driven out by crippling taxes and increasing regulations, corporate landlords are stepping in to fill the gap.

It might sound like a solution—after all, someone needs to provide rental properties. But here’s the catch: as these corporate giants take over, the rental market risks turning into a monopoly, where tenants face higher rents, stricter contracts, and a future where the personal touch of independent landlords is a distant memory.

Small Landlords Out, Corporate Landlords In

In recent years, policies like Section 24 have put immense pressure on small landlords, who traditionally owned just a few properties. These landlords—families, retirees, or small business owners—often viewed property rental as a reliable investment. But the increasing costs of taxation, coupled with the mountain of regulations, are pushing them out of the market.

Take Tom and Sarah, who have been renting out their two flats for years. Their tenants love them—they’re responsive, flexible, and quick to deal with issues. But after seeing their tax bill skyrocket under Section 24, Tom and Sarah are now forced to sell. They just can’t make the numbers work anymore.

As landlords like Tom and Sarah leave, large corporate landlords are swooping in to take their place. These companies often buy up properties in bulk, build large-scale developments, and focus on maximising profits.

What’s Wrong with Corporate Landlords?

Corporate landlords bring scale and efficiency, but the problem lies in how they’re fundamentally changing the rental experience for tenants. As these companies grow their share of the market, we’re starting to see the rise of a rent monopoly—and it’s tenants who are paying the price.

1. Skyrocketing Rents

With fewer independent landlords in the market, competition is shrinking. As corporate landlords dominate more of the rental sector, they gain the power to set rents at higher prices.

Take Amy, who recently moved into a new Build-to-Rent development after her independent landlord sold up. Her new flat is nice, but the rent is 25% higher than what she was paying before—and she’s been told it’s likely to increase again when she renews her lease next year. With fewer affordable options available, tenants like Amy are stuck paying higher rents, even when wages aren’t keeping up.

2. Loss of Personalised Service

One of the key benefits of renting from a small landlord is the personal service. Independent landlords are often more flexible, understanding, and responsive to their tenants’ needs. They live locally, take pride in their properties, and build long-term relationships with their tenants.

When these landlords leave the market, tenants are left with faceless corporate management companies that prioritise profits over tenant welfare. Anna, who rented from a small family landlord for five years, never had to wait long for repairs, and her rent was stable throughout her tenancy. But when a corporate landlord took over her building, the service became impersonal, and rent reviews became frequent. Now, she’s just a number in a database, waiting days or weeks for basic maintenance.

3. Stricter Tenancy Agreements

With corporate landlords, tenants are often forced to accept one-size-fits-all tenancy agreements. There’s little room for negotiation, and contracts tend to favour the landlord. Corporate landlords aren’t interested in negotiating flexible terms, and tenants may find themselves locked into rigid contracts with limited rights.

For example, Daniel, a tenant in a corporate-owned Build-to-Rent complex, found that his tenancy agreement offered no flexibility when he needed to break his lease due to a job relocation. He was hit with heavy fees for early termination, something that wouldn’t have happened if he were renting from an independent landlord.

Are We Heading Toward a Rent Monopoly?

The growing influence of corporate landlords is reshaping the UK rental market. As more independent landlords are driven out by government policies, corporate landlords are stepping in, consolidating control, and creating a rental monopoly where tenants have fewer options and little bargaining power.

Here’s the danger: as competition decreases, corporate landlords are free to drive up rents, limit tenant rights, and prioritise profits over the well-being of tenants. With fewer independent landlords to offer affordable and flexible housing, tenants could soon find themselves at the mercy of large, profit-driven entities that care more about their bottom line than providing quality homes.

The Government’s Role in the Shift

So, how did we get here? Much of the blame lies with government policies that have unintentionally pushed independent landlords out of the market. Section 24, as we’ve mentioned, has made it financially untenable for many smaller landlords to continue operating, particularly those with buy-to-let mortgages.

At the same time, regulations such as Minimum Energy Efficiency Standards (MEES) and eviction bans, while important for tenant protection, are adding layers of complexity that smaller landlords struggle to keep up with.

Meanwhile, corporate landlords, with their larger scale and deeper pockets, are better equipped to handle these regulatory demands and are taking full advantage of the opportunity to buy up more properties.


The Consequences for Tenants

The rise of corporate landlords isn’t just an issue for landlords—it’s having a direct impact on tenants. With rents rising and tenancy agreements becoming more rigid, tenants are losing the flexibility and affordability they once enjoyed.

  • Higher Rents: As corporate landlords consolidate their power, rents are continuing to climb. Tenants are spending a greater proportion of their income on rent, leaving them with less money for savings or other essential expenses.
  • Reduced Rights: Corporate landlords often favour standardised contracts that limit tenants’ ability to negotiate on key issues, from repairs to rent increases. Tenants have less freedom and fewer options for securing fair terms.
  • Less Personal Care: Independent landlords often took pride in maintaining good relationships with their tenants, responding quickly to repairs, and offering flexibility in difficult times. As corporate landlords take over, tenants are left with impersonal management structures that can’t offer the same level of care.

What Can Be Done?

If we want to stop the rise of a rent monopoly and keep the rental market diverse, the government needs to rethink its policies and provide more support for small, independent landlords. Here’s how we can turn the tide:

  1. Reform Section 24: Repealing or reforming Section 24 would allow independent landlords to stay in the market and keep rental supply strong.
  2. Incentivise Long-Term Landlords: The government should offer tax incentives or grants to independent landlords who provide long-term tenancies and high-quality homes.
  3. Regulate Corporate Landlords: While small landlords face increasingly strict regulations, corporate landlords often escape the same level of scrutiny. Greater regulation of Build-to-Rent giants would help ensure they’re held to the same standards as small landlords.

Support Property118 in the Fight for Fair Competition

At Property118, we’re working to protect independent landlords and ensure that the UK rental market remains fair, competitive, and affordable. We believe that tenants should have the option to rent from local landlords who care about their properties and communities, not just faceless corporations.

But we can’t do this without your help. If you believe in protecting small landlords and stopping the rise of corporate monopolies, please consider supporting Property118.

Every donation counts. Use the form below to help us fight for a fairer, more balanced rental market.

 

The rise of corporate landlords isn’t inevitable—but without action, it soon will be. Together, we can protect independent landlords and keep the rental market accessible for all.

Your Support is Crucial to Our Community

Hidden

Next Steps: Install a Payment Add-On

To accept donations via this form you will need to install one of our payment add-ons. To learn more about your payment add-on options, visit the following page (https://www.gravityforms.com/blog/payment-add-ons). Important: Delete this tip before you publish the form.
Name(Required)
Email(Required)
Donation Amount(Required)
Choose how much you would like to donate each month.
Please note this is a monthly recurring subscription until cancelled with your card provider or by emailing editor@property118.com


Share This Article


Comments

Cider Drinker

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

9:16 AM, 11th November 2024, About 2 days ago

Spot on with every point.

The issue is that the government do not want private landlords and would welcome more corporate landlords.

We had council housing. It didn’t work as many tenants didn’t look after their homes and Councils spent a fortune doing repairs.

We have PRS properties. Encouraged by anti-landlord sentiment at every turn, some tenants wilfully damage or neglect their homes. Landlords can’t always afford to repair them and many just don’t want to unless the tenant is evicted first. The Law is on the tenant’s side. The PRS doesn’t work work because it is too difficult to evict bad tenants.

Governments and tenants will find it much more difficult to bully Corporate landlords. They have strength in numbers - unlike private landlords that are so poorly represented by landlord associations.

John Adair

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

10:45 AM, 11th November 2024, About A day ago

Totally agree. One point, after RR.Bill won't effectively all tenants be on the same type of contract, irrespective of size of landlords business ?

Seething Landlord

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

11:08 AM, 11th November 2024, About A day ago

Reply to the comment left by John Adair at 11/11/2024 - 10:45
Correct, which negates many of the points made. Tenants will have the whip hand when it comes to rent increases and delays in repairs. Faceless corporations will be under the same pressures and subject to the same sanctions as private landlords.

Ed Tuff

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

11:09 AM, 11th November 2024, About A day ago

But if you're a LL selling a property, don't you welcome these corporate LLs to take it off your hands?

Reluctant Landlord

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

11:20 AM, 11th November 2024, About A day ago

Reply to the comment left by Seething Landlord at 11/11/2024 - 11:08
or will they?

dismayed landlord

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

11:30 AM, 11th November 2024, About A day ago

Reply to the comment left by Ed Tuff at 11/11/2024 - 11:09
Yes!

Seething Landlord

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

11:43 AM, 11th November 2024, About A day ago

Reply to the comment left by Reluctant Landlord at 11/11/2024 - 11:20
Will they what?

Jason

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

12:04 PM, 11th November 2024, About A day ago

Happens in all sectors. Small individuals start off then overtime bigger and bigger players enter the market until it’s dominated by large corporations with deep pockets and government backing.

Take loans (used to be loan sharks now only big banks), groceries (used to be your local shop now big supermarkets). Local pubs dying you have to goto Weatherspoons now. Landlords are next and it’s inevitable, where there is serious money to be made it’s only a matter of time before mass market giants push/buy out the smaller operators…

Only realistic option is to scale up or sell up. Or hope political will can change (good luck)

Find then next niche market until the cycle repeats there.

Rob Thomas

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

12:12 PM, 11th November 2024, About A day ago

Reply to the comment left by Ed Tuff at 11/11/2024 - 11:09
These new corporate landlords aren't interested in buying individual properties. They are building new Build-to-Rent blocks in the belief that this will keep down management costs.

Personally, I'm sceptical that large corporates are more efficient. Everything they do has to be carried out by paid staff while the small landlord can often fix small problems themselves. While some small landlords like me do their own accounts, the corporates will need to employ professional accountants. Of course, it is the tenants who pay for all of this and the much higher return on equity that corporates demand.

As for service, I heard of one corporate landlord that could only be contacted by tenants needing repairs with a phone number that was often not answered at all.

Rod

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

12:15 PM, 11th November 2024, About A day ago

Build to Rent landlords currently only account for 5% of the PRS, although this rises to nearly 50% of the PBSA (purpose built student accommodation).

As Mark alludes to, larger organisations will seek a standardised model that allows them to cookie cutter their model. This means standardised layouts, contracts and tenant types.

Most of these corporate operators will focus not be interested in buying individual period properties, where the costs will be higher, both to retrofit them and to maintain them.

We have already seen them receive special treatment with the proposed carve out for PBSA to enjoy fixed terms.

Social media and popularist politics has already helped cause social division. Creating homogeneous communities within segregated communities will add to the social exclusion we have seen grow over recent years.

I hope I speak for many posters and readers, when I say that we are grateful for the work which Mark and his team do to enable landlords and the wider PRS community to have a voice.

While I understand that doing this requires funding, I think only offering the ability to show support with monthly payments could be broadened by the option to make one-off or annual payments.

1 2

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Automated Assistant Read More