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 weeks ago 19

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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.

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Grumpy Doug

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12:38 PM, 11th November 2024, About A week ago

As Rod points out, the BTR sector currently equates to 5% of the size of the PRS (actually less as the current statistics include units under construction and planned). Despite favourable treatment, BTR now faces far greater economic pressures than before COVID (materials, labour, cost of finance, planning hurdles) so it will be interesting to see how rapidly it does grow. Let's face it, private equity will always gravitate towards higher profits and they are under pressure in BTR land.
On a positive note, my rents have never been higher. BTR helps push "market rates" up to extraordinary levels and my tenants get more spacious accommodation, gardens etc that they will never see in a BTR box in the sky. My strategy over the last few years has been to invest heavily in decoration, furnishings and fittings. As a result I get to pick and choose tenants, all with guarantors.

Monty Bodkin

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12:54 PM, 11th November 2024, About A week ago

Reply to the comment left by Rod at 11/11/2024 - 12:15
"Build to Rent landlords currently only account for 5% of the PRS"

Where are you getting your figures from?

From this time last year;

https://www.trowers.com/insights/2023/november/what-is-build-to-rent-and-how-does-it-work#

'That said BTR still only comprises a very small proportion of the wider Private Rental Sector (PRS) in the UK – about 1.6%.'

No where near enough to fill the gap of landlords leaving.

NewYorkie

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13:10 PM, 11th November 2024, About A week ago

Much of what Mark says is right, but I disagree that 'Much of the blame lies with government policies that have unintentionally pushed independent landlords out of the market...'. I believe Osborne's move with s24 was deliberately aimed at removing the smaller unincorporated landlord.
BTR is not aimed at the market currently occupied by BTL. It is targeting the move towards what I see as lifestyle renting. Those who prefer to rent until they can afford to buy, but want to be closer to work, good schools, and social life. They want higher quality accommodation in core cities, and onsite services e.g. gym, and can afford to pay higher rents. They don't care if their landlord is 'local' or corporate.
BTR may well be the new 'leasehold' which, after all, is still rental, and is an unregulated scam, ruining the lives of many who believed they were becoming home 'owners' through unaccountable and corrupt freeholders and managing agents, and uncapped service charges. At least BTR will be just as heavily regulated as BTL.
There will be many BTL landlords who will stay in the game, but I will invest my money in BTR.

Rod

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14:08 PM, 11th November 2024, About A week ago

Reply to the comment left by Monty Bodkin at 11/11/2024 - 12:54
I am unable to put my hand on the specific source (note 5% includes those with agreed planning or under construction). Here are two indicative links supporting my claim.

How much did you think it was?

- - - -

Number of build to rent homes in the UK 2024, by status and property type
Published by Statista Research Department, Oct 1, 2024

https://www.statista.com/statistics/826858/number-of-build-to-rent-homes-uk-by-status/

As of the second quarter of 2024, there were nearly 116,000 build-to-rent homes in the United Kingdom, the majority of which were apartments in multifamily housing. Additionally, over 45,000 homes were in construction, and 105,000 were in planning.

Build-to-rent refers to homes that are built specifically for renting rather than for sale. They differentiate from traditional rent homes with their focus on the provision of services, i.e. professional on-site management, shared spaces, work zones, fitness centers. A substantial share of the built-to-rent stock is concentrated in London.

- - - -
https://landlordknowledge.co.uk/build-to-rent-dominates-londons-rental-market-with-highest-market-share/

The London market, in particular, has seen substantial growth. Build to Rent’s share of the capital’s private rental sector climbed from 1.8% in 2018 to 4.2% in 2023, with completions up by 61% since 2018. This growth underscores the sector’s increasing significance in London’s rental landscape.

G Master

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15:19 PM, 11th November 2024, About A week ago

Can anyone recommend a corporate landlord who is prepared to buy my portfolio on London?

David Lawrenson

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17:17 PM, 11th November 2024, About A week ago

I was writing about this 14 years ago - about how the government was determined to hand over our business to big global corporations and banks - and I have frequently revisited this topic since that time.
Glad others have woken up to it too now.

It is the same playbook as we see in farming / agriculture where the clear intent is to wipe out the family "kulak" farmers.

All the links to our many articles on this here -

https://www.lettingfocus.com/blogs/category/build-to-let/page/2/

John Adair

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18:03 PM, 11th November 2024, About A week ago

Sadly in many sectors of business, this has been happening unnoticed under our noses for decades, take local cafes, replaced by chain fast food or good private b&b's by corporate 'travel inns'

Peter Merrick

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9:54 AM, 12th November 2024, About A week ago

One of my tenants in town texted me Sunday afternoon to say that the uPVC front door mechanism wasn't working, just as I was about to leave town. I went over a few minutes later to assess the situation and make sure they could be safe for the night. I suggested they lock the second (wooden) door instead, only to find that that it was also faulty but did lock from the inside. So we agreed that they would use the back door for now and I had the lock replaced next morning with a much better one. The uPVC mechanism is working properly again, but the barrel was also broken and waiting for a new security cylinder to be delivered, which I will fit when it arrives.
I wonder how that would go with a BTR provider?

NewYorkie

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10:57 AM, 12th November 2024, About A week ago

Reply to the comment left by Peter Merrick at 12/11/2024 - 09:54
Clearly, you self-manage, and your tenant's are fortunate that you have the time to devote to their needs. But many landlords use agents, and the situation you describe would be dealt with by them. I don't see why that would be any different with a BTR provider, or a large portfolio BTL landlord, for that matter.

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