Surveyors are backing landlords, and warning that any further regulations could generate a crisis in the rental market.
They suggest that the upcoming ban on lettings fees and the proposed scrapping of Section 21 could lead to more landlords leaving the private rental market.
If more landlords exit the market, the surveyors warned, it could end up hurting the very people the government is trying to help by bringing in the regulation – tenants.
Fewer landlords means fewer rental properties and higher rents.
This latest development follows a crackdown on buy-to-let in recent years, which has seen a reduction in the tax relief that landlords can claim on mortgage interest and a three per cent Stamp Duty surcharge on buy-to-let properties.
The latest survey from the Royal Institution of Chartered Surveyors (RICS) said tenant demand is rising across the country, while the number of new landlords entering the market is dwindling.
Landlord numbers have been declining each quarter since the middle of 2016 – which is already the longest continuous sequence of falling landlord instructions since records began in 1998.
The latest RICS survey was published ahead of the Tenant Fees Bill, due to come into force in June 2019.
The Bill will see a ban on landlords and letting agents charging tenants any additional fees. Fees will be restricted to charges for replacement keys and late rent payments only.
Meanwhile, the proposed scrapping of Section 21 would mean a ban on so-called ‘no fault evictions’. This is where a landlord can currently give tenants notice without having to give a reason.
A RICS spokesman said: “We do not believe that the current proposed changes around Section 21 will help bring about the changes within the industry that the government hopes, without significant and sweeping changes to the overall process including the courts.”
However, it is the very fact that landlord numbers are dwindling which could prove to be a major boost for those property investors left operating in the market.
This is due to a question of supply and demand, where the same number of tenants are competing for a lower number of rental properties.
Commenting in the RICS survey, Anthony Filice, a surveyor in Cardiff, explained: “There are fewer landlords listing their properties, but there is greater demand to rent, and this is outstripping supply.
“Rents are being quickly agreed and higher rents are being paid,” he added.
“Many landlords are concerned about new legislation to abolish section 21, and are considering withdrawing from the market.”
Jason Coombes, a surveyor in Birmingham, commented in the RICS survey: “The lettings industry has experienced, quite possibly, the worst period of legislative interference of any industry within the property sector.”
RICS said rents will rise by two per cent in the next 12 months, and then grow by three per cent on average during the next five years.
It also said asking prices are ‘more realistic’, which may be of interest to those landlords seeking to buy additional properties at a discounted price.
Also in its latest survey, RICS called for a recognised professional body to be established, to help raise standards within the housing market, including in the rental sector.
“This would enhance the landlord-tenant relationship,” it concluded.
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22 June 2020 • 9-minute read
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