Why Landlord Confidence is Growing

New data from the National Residential Landlords’ Association reveals there has been a large increase in confidence among landlords after slumping to a record low last year.

Confidence in the market in the third quarter of 2023 had plummeted as a result of the economy in general, aspects of the Government’s Renters Reform Bill and proposed changes to rental properties’ energy efficiency ratings.

Landlord       © Svitlana Hulko / Shutterstock.com


However, according to the NRLA’s In Focus: Tax and Taxation report, confidence has grown by almost 8% since the dip at the end of September.

This is one of the biggest increases since the Landlord Confidence Index began in 2019 and represents a significant development in what has been a depressed market following the Covid pandemic of 2020.

So just why has landlord confidence improved since it hit such a dramatic low four months ago?


Changes to Renters Reform Bill

Just about every UK landlord had serious doubts about some aspects of the Renters Reform Bill as it began going through the Parliamentary approval process last year.

A major bone of contention was the proposal to ban no fault evictions, which was first mooted in 2019. Currently, landlords can legally evict tenants without giving any specific reason.

Further details of how the Section 21 evictions would be outlawed were published in May 2023.

They are England’s leading cause of homelessness, according to the charity Crisis, with tenants struggling to pay their rent during the cost-of-living crisis.

However, landlords feared the change would make it harder for them to evict problem tenants and repossess houses when they had a legitimate reason to do so.

Then, in October 2023, it was announced this aspect of the Renters Reform Bill would be postponed until the courts system was reviewed and updated to coincide with the new legislation. The Bill is still making its way through Parliament and is at stage four of 11 stages it must pass through before becoming law.

There is no date set as to when this will happen, although housing minister Michael Gove has pledged it will be going ahead after the courts system update.

However, for now, landlords have been given a stay of execution and feel the government has at least listened to their concerns.


Property Portal proposals

New proposals to include a Property Portal in the Renters Reform Bill have received a generally positive reaction.

Currently, it’s challenging to regulate the private rental sector, because there’s no data on exactly how many landlords and tenants there are in the UK.

The current estimate is around 4.5 million tenant households living in buy-to-let properties owned by 2.6 million private landlords.

The portal is aimed at creating a database of rented homes, landlords and agents, including the contact details of whoever is managing the property – providing greater transparency in the sector for both tenants and landlords.

It will also have an educational purpose, as it will include details of the Decent Homes Standard and will contain outstanding enforcement orders for breaches of the standards.

The portal will provide a “one stop shop” for landlords, tenants and local councils to access relevant information.


Energy efficiency laws

The government had announced it was to launch a mandatory energy efficiency rating for rental properties. Newly rented homes would need an Energy Performance Certificate rating of C or above in future, beginning next year.

This would have proved extremely costly for landlords of older properties, who would have needed to spend a lot of money upgrading their portfolio. In fact, more than 50% of landlords surveyed by the NRLA said they would be likely to either exit the market altogether, or sell some properties, if this became law, because they wouldn’t be able to afford the changes.

While having a good energy rating is supported in principle by landlords, 85% have called for financial support from the government towards making such sweeping energy efficiency improvements.

News that the government had scrapped the proposals, after realising the negative impact they would have on landlords and the private rental market in general, improved confidence in the sector again.


Are landlords still selling up?

The private rental market has been a challenging one since the Covid pandemic, with many landlords choosing to leave the sector because it was proving too costly.

In 2022, 15.7% of UK landlords sold at least one of the buy-to-let homes in their portfolio as the market gradually shrank. However, in 2023, the exodus away from private rentals slowed down and only 14% of landlords had sold properties by the fourth quarter. In addition, around 11.2% of all properties for sale were snapped up by buy-to-let investors.

Although the green shoots of recovery may seem small, it is a step in the right direction after the gloom of recent years.

Landlords considering buying more properties, or investors entering the market for the first time, are taking advantage of furniture packages to reduce the expenditure and hassle of furnishing their homes. Professional suppliers and installers of furniture for landlords can help keep costs down, and you can have multiple items delivered and fitted on the same day.

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