In an exclusive brunch club discussion hosted by Medianett Publishing, in partnership with The Mortgage Works, several industry experts shared their views about the key solutions needed for a better PRS — including more clarity around new rules in the sector and EPC requirements.
The event, moderated by Medianett Publishing’s deputy editor (print) Andreea Dulgheru, brought together seven BTL market experts, including Robert Gardner, chief economist at Nationwide Building Society; Dan Clinton, head of product at The Mortgage Works; Stephanie Kvam, deputy director for the PRS at the Department of Housing; Timothy Douglas, head of policy and campaign at Propertymark; David Hollingworth, associate director for communications at L&C Mortgages; Niall Hebron, director at Connect IFA; and Suzanne Smith, founder of The Independent Landlord.
Robert kicked off the conversation with a recap of The Mortgage Works’ latest report, which highlighted a rapid growth in portfolio landlords, with the proportion of landlords owning five or more properties having more than tripled from 5% in 2010 to 18% in 2021.
Less than 10% of landlords are recent entrants (who have joined the market within the past three years), while just over half of existing landlords have operated in the market for 11 years or more.
“If you think about everything that has happened since 2015, the stability of the PRS is impressive, given the shocks that have rocked the sector,” stated Robert, adding that the changing Bank of England interest rate environment has been, and continues to be a particular challenge in this sector.
“When interest rates fell, a landlord was prepared to pay much more for any given house, and that had a huge impact on drive and appetite for residential property investment.
“Now we find ourselves in a very different interest rate environment, and there is a lot of uncertainty about how that environment will evolve going forward— it's going to be really important in determining how the market evolves in the decades ahead.”
The latest TMW report also revealed that an 80% surge in private rentals for tenants aged between 55-64 over the past decade — which, according to the data, correlates to the ongoing decline in homeownership among this age group.
There has also been an increase in private renters aged 65 and above, with figures rising by 46% compared to those from 2013.
“Some first-time buyers are getting on the property ladder later in life, while some won’t get on the ladder at all, because they can’t afford it. So, if we haven’t got the right properties [for them], how are people going to continue as they go into retirement?” said David.
In response to the data and based on her experience as a landlord, Suzanne emphasised that while the current market conditions and the rising house prices are forcing some tenants above the age of 55 to rent instead of buy a home, some intentionally choose this route.
“I have a renter in her late 50s who is a high earner and could buy a house, but doesn’t want to — and she’s really happy to rent,” said Suzanne.
That being said, she emphasised that older tenants who are reliant on a pension and cannot afford to buy and own their property could face significant challenges when looking for a rental property.
“Particularly with the abolition of section 21, landlords are going to be a lot more conservative when it comes to tenant choice, and for those who don’t have an income, it might be more difficult for them to rent unless they’ve got substantial assets — and if they do have that, why are they renting in the first place?” 
During the roundtable, the panel also discussed the new Labour government and its proposed Renters Right Bill, which the majority of the experts expected from the general election.
However, everyone agreed that with this bill now announced, the government needs to provide more clarity about how and when exactly it aims to achieve all its initiatives.
“I think you would be very naive if you're working in the sector to think that section 21 was going to stay — politically, across all sides of the House of Commons, there's an appetite to get rid of it. The question is, how is this going to work? Can you get your property back when things go wrong? Whatever happens, the sector wants certainty and clarity on the timeframe, and [how the proposals will be implemented],” commented Timothy.
Niall agreed, adding that the rental reform should be fair and balanced for both tenants and landlords, and should contain clear rules for both parties so nothing gets misinterpreted.
Meanwhile, Suzanne claimed that the regulation of letting agents is key, as they are the players giving advice to landlords, without any need for an official qualification.
“There are some good letting agents, but I have seen some terrible ones as well. At the moment, anyone can set up as a letting agent, as long as you don’t have a criminal conviction — and unfortunately, that leads to some mediocre people entering the market,” said Suzanne. “If you want the biggest impact, [the government] needs to do something about [regulating] letting agents.”
Overall, Daniel believes the government should consider the aggregate impact of the various PRS policies, to ensure a balance for both landlords and tenants.
“Reform needs to work for both tenants and good landlords, in order to avoid the unintended consequence of further demand/supply imbalance across the PRS,” he said.
With the Labour government having confirmed the reintroduction of minimum EPC requirements for rental properties — with landlords expected to upgrade their properties to a C EPC rating by 2030 — the experts have also highlighted the need for clearer rules and information that landlords need to know to achieve this standard.
“We've had this sword of Damocles over our head over EPCs for however many years, and then that went away, and it's back again. Now, people want to know the practicalities. What will be the transition? As a landlord, will you be able to allow void periods, or do you evict the tenants to do the work? If you also take into account the Decent Homes Standard for the PRS, what will this mean, and how will this be measured? Will this be self-certified? If you're a landlord trying to comply [with the new rules], it's difficult, even if you want to do it,” emphasised Suzanne.
Timothy also highlighted that the new EPC requirement and the government’s initiative to boost the energy efficiency of rental properties must take a tailored approach suitable for all types of properties, rather than a blanket approach.
“If you use a one-size-fits-all approach for the 18-19 different types of property we’ve got across the country, you’ll wipe out properties from the PRS. This is such a multi-faceted [endeavour], you have to consider the dynamics of the stock itself,” he said.
Timothy believes the implementation of the new EPC rules should take into consideration the property’s ability to reach the required rating, and offer proportionate exemptions where necessary to avoid landlords selling low-value stock that is hard to upgrade, and thus leaving potentially vulnerable tenants without a home.
Picture captions (in order of appearance in article): Robert Gardner; Suzanne Smith; Niall Hebron; Dan Clinton; Timothy Douglas
