Successive governments’ approach to the private rented sector (PRS) is likely to lead to greater dominance by professional investors and ‘occasional landlords’ exiting the space, industry professionals have argued.
During a panel at yesterday’s Specialist Lending Expo, leaders at several lenders discussed how they were seeing more amateur landlords turning away from letting.
Steve Cox, chief commercial officer at Fleet Mortgages, explained that it was natural for any government to perhaps “punish” landlords, but the resilience of the market would see it adapt.
“You can’t destroy it politically,” Steve told the audience. “The shift away from the amateur landlord to the more professional end, that’s inevitable.”
He added: “The [SDLT change] is going to just recalibrate the market. So, there may well be a lull at the moment because some people consider the additional cost of purchasing another asset.”
However, Steve argued the UK’s housing shortage would continue to support landlords, regardless of them being amateur or professional.
“The PRS will survive and thrive, in my opinion,” he added, “it’s as simple as people have nowhere else to live.”
In agreement was fellow panellist Barry Searle, managing director of the property division at Castle Trust Bank: “The decisions that were made in the past couple of years have taken out the ‘occasional landlord’, or the ‘private landlord’, so what you’ve got now are more professional landlords.”
Like Steve, Barry didn’t see this necessarily as a weakening of the rental market and pointed out that supply/demand dynamics still favoured landlords in general.
“There’s still too many people that want housing,” he added. “Therefore, I believe that the rental market will stay strong because where else are they going to be?”
The BTL space isn’t just experiencing a change in the makeup of landlords, but also asset type. Panellist David Whittaker, CEO at Keystone Finance, saw this as a natural diversification.
“[Some landlords] didn’t start off buying an HMO, but someone in the local council has said this whole area is now in the Article Four direction,” said David, who pointed out they can buy an HMO licence for £1,300 for five years. “So, they find themselves HMO landlords more by circumstance than by intention.”
Steve has also seen more landlords broadening into HMOs, as well as new regions due to superior yields. “We see that trend continuing; landlords are just trying to balance that capital growth that they’ve enjoyed, but they need the yield in their portfolio that is in HMOs and properties like that. But it’s also outside of London and the South East, and we think that will continue.”
