Goodlord’s State of the Lettings Industry report found that legislation and regulation changes were prompting 71 per cent of landlords to consider quitting the market while 53 per cent were thinking of exiting the market specifically because of the Renters Reform Bill. Nearly half (47 per cent) cited the scrapping of Section 21, which has also been proposed in the paper.
The need for rental properties is expected to remain however, with 39 per cent of tenants saying they were unlikely to buy a home of their own in the next five years.
Over 600 lettings professionals took part in the survey, including almost 100 private landlords, and more than 2,000 tenants in the tenant survey.
More than a quarter (28 per cent) of lettings agents said they had seen more than a tenth of their landlords exit the sector in the past year and more than two thirds expected to see more leave in the coming year.
Rental reform changes
Some 87 per cent of landlords said they were either very or somewhat concerned about the impact of the Renters Reform Bill on the sector.
Of the proposed changes, 53 per cent of landlords expect the abolishment of Section 21 to have a “major and negative impact” on the market, in contrast to 23 per cent of tenants who feel it would be a positive move.
While more than two thirds of landlords do not currently use a rent protection service, scrapping the no fault eviction rule would make 30 per cent increase the likelihood of using one. However, this would not have an effect on 36 per cent of landlords.
In addition, a third said introducing new grounds for evictions under Section 8 instead could provide a “minor and positive impact”.
Three fifths of landlords feel allowing pets into rental homes would have a negative impact on the rental market.
Despite not being in favour of the Renters Reform Bill, 58 per cent of landlords felt either very or somewhat confident about their preparation for future changes to legislation.
On the other hand, 42 per cent of tenants felt it would be good to see more legislation around renting in the UK.
Cost of living impact
Both lettings agents and landlords expect tenants to be worst hit by the cost of living crisis, with 35 per cent and 45 per cent respectively saying so.
Agents believe nearly a fifth of landlords will be impacted by rising costs.
Almost half (46 per cent) of tenants are concerned that this will impact their ability to pay rent in the future however 82 per cent were yet to miss a payment. Some 15 per cent made arrangements such as payment plans or borrowed from friends and family to cover rent. Just two per cent said they had missed payments.
Tom Mundy, COO at Goodlord, said: “This report comes at a seismic time for the industry. After two and half years of almost unimaginable upheaval, the private rental sector is now facing another series of intense challenges. A raft of new legislation and a major economic crisis mean that the year ahead will be choppy.
“It’s clear from the data that tenants are concerned about their finances and landlords are also feeling uneasy. Despite this, the majority of agents remain optimistic about the future and confident in their ability to weather the forthcoming challenges. As ever, I’m full of admiration for our industry stakeholders and their ability to adapt and thrive even in unsettled times.”
