Institutional investors are increasingly joining the PRS — but this could have a detrimental effect for those dependent on affordable housing, warned several brokers.
Asked by Newspage how they feel about institutional investors — such as Lloyds Bank and John Lewis — potentially grabbing a bigger slice of the pie, advisers said this can be perceived as a positive for the current struggling market, but there is a concern that this group will focus on wealthier areas and leaving the rest of the market in a rut.
“The pros [of institutionalisation] are more professionalism, compliance and potentially a stable environment for tenants; however, this doesn’t mean it’s an all-round win,” said Imran Khan, co-founder of PropertyLoop.
“Institutional landlords are more likely to focus on affluent areas, leaving a gap in affordable housing — a sector where individual landlords have played a crucial role.”
Joe Garner, managing director of property consultants at Joe Garner Consulting, agreed, stating: "The real agenda has now unfolded — a massive shift of private property into the hands of corporate giants and deep-pocketed investors.
“While renters in swanky city centre pads may see an uptick in living standards, it's a distant dream for most. As always, it's the less fortunate who bear the brunt of this dark comedy."
The institutionalisation of the PRS will not only affect tenants looking for affordable rental properties, but also those keen to become homeowners, stated Graham Cox, mortgage broker at Self Employed Mortgage Hub.
“The current administration is ideologically averse to building social housing at any great scale, and think the PRS can take up the slack,” he added.
“They absolutely envisage a future where big corporations will own most of the privately rented housing stock, house prices continue to soar, and the average Joe is priced out of owning their own home.
“Unfortunately, this government knows the price of everything and the value of nothing.”
Cox's views were mirrored by Lewis Shaw, founder of Shaw Financial Services, who added: “The institutionalisation of BTL and the PRS has slightly Orwellian undertones.
“Yes, anything that seeks to improve the lot for tenants who have been bled dry over the past twenty years can only be a positive as long as there's a solid government framework that properly regulates landlords and improves the stock of UK housing as it goes.
“My main worry is that we are hurtling headlong into a neo-feudal society where big business controls how and where you live, and more importantly what you pay.
“If ever there was a reason for young people to buy their own home before it's too late, the institutionalisation of the rental sector has got to be it.”
Peter Stamford, director at Moor Mortgages, highlighted the importance of everyday landlords in today’s economy: "The government is pushing homes into big corporate hands, sidelining everyday landlords.
“These big players chase profits, often ignoring affordable housing.
“We need both small and large landlords for a fair housing market, and this direction risks creating a divide: those who own homes and those forever stuck renting — we need to challenge this before it’s too late.”
