The unrelenting demonisation of The Landlord

Most people’s perception of the private rented sector is coloured and informed by press comment. It’s no surprise the bad news gets the headlines.?

Headlines about how rents are going up clearly have a certain veracity, despite differing local market conditions – exactly as there’s no one size fits all sales market – but there are structural factors at play. Some of these have been thrown into relief by the new Renters (Reform) Bill which received its first reading in May.

The problems underlying the balance of supply and demand in the rental market go back several decades. Selling off Council Homes squeezed the supply of Social Housing and repeated Government (of both colours) claims about the importance of creating new homes have been undermined by a chronic lack of continuity – 15 housing minsters since the 08/09 financial crisis alone. The fact that Michael Gove has just handed back almost one third of his 22/23 Housing Budget because of “Rising interest rates and uncertainty in the Post Pandemic housing market” just smack of incompetence, political constipation – think NIMBY – and a lack of Will. If you wanted to build hundreds of thousands of houses the time was in 09 when builders were tottering and money was cheap. Ready-made building expertise plus billions in cheap money could have solved the issue by now.

But back to the Renter’s [Reform] Bill and those supposedly evil landlords. After 08/09 the BoE was terrified of another mortgage inspired crash – namely that when interest rates went back up landlords would simply sell up and head for the exit in a rush. This was ill informed and as one of their agents at the time, told them so. Most landlords own one or two properties for all sorts of reasons, mostly for the long term and not as a principal source of income and are therefore highly unlikely to sell up. I also said they needed to stop reading Daily Mail headlines about landlords who owned multiple properties with 95% mortgages. Property is, by definition, an illiquid asset and needs to be viewed as such. The Gov’t of the time also wanted to encourage first time buyers and so attempted to engineer, never a good idea with free markets, a situation to ease landlords out of the market and usher first time buyers in. The irony of having caused a dwindling of PRS supply as an unintended consequence of trying to do the opposite shouldn’t be ignored.

Ignoring the fact that the flexible and vital Private Rented Sector was bigger than the Assisted Sector, and every bit as important, a stealthy series of Tax hikes on landlords was instigated [Section 24] over a number of years and compliance was increased. The unintended consequences are now glaringly evident, with clumsy interest rate handling the final nail in the coffin for many competent landlords facing a rash of changes in the new Bill which appear to penalise them further and assume they are all making significant incomes and can afford more costs.

Many now struggle and are making a loss – due to rising costs and compliance, interest rates and lack of a sensible tax regime. Instead of encouraging supply in a vital sector, landlords are now leaving the market, pushing rents up. DHLUC responses are based on 12–18-month-old figures, hardly helpful and woefully out of date in a rapidly changing sector. These do not echo what’s happening on the ground and the upshot will be more costs being forced on to tenants and less supply all round. It’s a vicious circle and one where focusing on making renters’ lives more robust whilst ignoring the plight of the vast majority of landlords is a triumph of political will over good sense. The clue is in the name – mentioning only Renters without addressing both sides is clumsy.

I fear decisions have already been made and that current conversations with DHLUC are simply window dressing.