Join iHowz on a gripping exploration of the ‘war against landlords‘ as we delve deep into the heart of a crisis gripping the UK’s rental market. In a landscape where landlords are fleeing in droves, leaving behind a trail of consequences that reverberate through society, we uncover the intricate web of factors driving this exodus. From the relentless barrage of legislation aimed at landlords to the emergence of offshore mega-landlords, the implications are dire. With homelessness on the rise and social housing in short supply, the stakes couldn’t be higher.

Index of Content

Introduction to the War on Landlords
Exodus of Small Private Landlords
Unveiling the Housing Crisis: Britain’s Looming Challenge
Urgent Calls for Action: Navigating the Perilous Path Ahead in Britain’s Housing Crisis
Forecasting the Future: Projections for 2030
Housing Crisis Fallout: A Closer Look at the Impact on Renters, Homeowners, and Landlords
Overlooking Shelter: The Legacy of Neglect by Housing Ministers
From Interest to Indifference: The Evolution of Housing Ministers
Legal Realities: Unbalanced Landlord Legislation vs. the Tenant Principle
Landlords Confusion Amidst Shifting Energy Standards
Fluctuating Mortgage Rates and Changes in Tax Regulations reduce Profitability
The Rise of the Mega-Landlords
Private and Offshore Equity Firms Impact on the UK Housing Market
iHowz’s Blueprint for Housing Reform: A Call to Action
Navigating the Battlefield: Addressing the War Against Landlords

Introduction to the War on Landlords

The war on landlords in the UK is not simply a catchy headline, and when we say ‘private landlords’ we refer to UK landlords in the industry and not the offshore investors or ‘mega landlords’ currently buying up a large percentage of the private rented sector (PRS). Private landlords have been scapegoated for the current UK housing crisis for way too long.

The bottom line as Leilani Farha, former UN Special Rapporteur on the Right to Housing, put it so succinctly:-

“The housing crisis is an affordability crisis.”

and this is so very true and yet social housebuilding has taken a backseat in the UK over the past decade. This shift has inadvertently thrust private landlords into the role of accommodating millions who once resided in council houses, while local authorities grapple with the staggering cost of temporary accommodation, such as hotels and B&Bs. The unfortunate outcome? A steady rise in homelessness.

However, instead of tackling the root causes of this issue, the blame is all too often pinned on private landlords. This narrative conveniently absolves politicians of responsibility for their policy decisions, while providing certain campaign groups with a convenient scapegoat. It is all too easy to highlight the small minority of unscrupulous private landlords in the press whilst ignoring the majority who provide decent housing and build good, mutual relations with their tenants.

Exodus of UK Private Landlords

Research published in 2023 by the consultancy BVA-BDRC reveals a significant trend amongst private landlords in England and Wales. According to the findings, private landlords are more than twice as likely to sell properties as they are to purchase them. In the second quarter of 2023, over one in ten landlords (12%) sold properties, while only 5% purchased properties during the same period.

Looking ahead, the research, commissioned by the National Residential Landlords Association (NRLA), indicates that a substantial proportion of landlords plan to reduce the number of properties they let over the next year. Specifically, over a third (37%) of landlords intend to downsize their portfolio, marking an all-time high in this trend. In contrast, only 8% of landlords plan to increase the number of properties they let in the market.

This reduction in rental properties comes despite strong demand from tenants. According to the survey, two-thirds (67%) of landlords reported an increase in tenant demand in the second quarter of 2023, reaching another all-time high.

Unveiling the Housing Crisis: Britain’s Looming Challenge

The housing crisis gripping Britain is no secret, and recent findings from a 2023 report by Watling and Breach shed light on its severity. From the bustling streets of cities in the Greater South East to the historic corners of York and Edinburgh, the crisis looms large, casting a shadow over the nation’s future and prosperity.

This report underscores the dire reality of the housing situation. The average house in England costs more than ten times the average salary, rendering homeownership an elusive dream for many. You will need very long legs to get on the first foot of the property ladder in this day and age! More shockingly, Britain’s lag in housing construction has led to a staggering backlog of 4.3 million homes missing from the national market. A gap that continues to widen with each passing year.

Furthermore, the report showed that statistically space per person for private renters has significantly declined. In addition, vacancy rates plummeted below 1% further exacerbating the scarcity of available homes in Britain.

Urgent Calls for Action: Navigating the Perilous Path Ahead in Britain’s Housing Crisis

In a sobering forecast, the above report by Watling and Breach lays bare the stark reality of Britain’s housing crisis. Particularly alarming is the revelation that the deficit is projected to persist for decades, even if the government manages to meet its current target of constructing 300,000 homes annually. Over the past decade, Britain’s housing efforts have consistently missed the mark, with an average of 178,228 homes built annually—leaving a significant shortfall compared to the ambitious target of 300,000.

The war against landlords, both in the media and governmental policy is not going to help in providing decent housing, especially in the social sector.

Forecasting the Future: Projections for 2030

A National Housing Federation Report by Pragmatix Advisory projects the following statistics for 2030:-

• “An extra 1.7 million households will be living in unaffordable homes – an increase of more than a third (35%). This includes 600,000 additional households living in unaffordable private rented homes, taking the total to 2.2 million.
• One million additional homeowners will be facing unaffordable mortgage costs, taking the total to 1.9 million – more than double current levels.
• 1.5 million families will be on the waiting list for social housing, a rise of 350,000 or almost a third (32%).
• 150,000 children will be homeless and living in emergency accommodations like B&Bs and hostels by 2030 – an increase of 20,000.”

Addressing the housing deficit, both current and projected isn’t merely a matter of meeting targets; it’s about confronting a crisis that threatens to endure for generations. Even if the government manages to reach its current goal of constructing 300,000 homes annually, bridging the gap would still take a staggering half a century. However, waiting isn’t an option. To truly tackle the problem head-on and provide relief sooner rather than later, an ambitious approach is necessary. According to Watling and Breach’s estimations, this would involve building 442,000 homes per year over the next 25 years, or an astonishing 654,000 annually over the next decade in England alone.

Housing Crisis Fallout: A Closer Look at the Impact on Renters, Homeowners, and Landlords

The housing crisis in the UK casts a wide net of impact, affecting renters, homeowners, and landlords alike. For renters, it translates to higher, unaffordable rents, limited housing options, and the constant fear of displacement. Homeowners face escalating property prices, making homeownership an elusive dream for many and straining household budgets. Meanwhile, landlords grapple with increasingly stringent regulations, diminishing returns on investments, and the daunting task of providing quality housing amidst mounting challenges. This multifaceted crisis underscores the urgent need for comprehensive solutions that address the needs and concerns of all stakeholders in the housing ecosystem.

Overlooking Shelter: The Legacy of Neglect by Housing Ministers

Since 1979, housing issues have been relegated to the sidelines of political priorities, evident in the fleeting tenure of housing ministers. A glance at Wikipedia’s list of Housing Ministers reveals a disconcerting trend: survival in the role for more than two years is a rarity, with most lucky to exceed a single year.

John Stanley and George Young, the longest-serving ministers in recent decades, exemplify this trend. Despite their extended tenures, their focus lay elsewhere, Stanley in defence and foreign policy, and Young infamously dismissing the homeless as:-

the people you step over when you come out of the opera

 

From Interest to Indifference: The Evolution of Housing Ministers

In the annals of iHowz’s engagement with Housing Ministers, a couple of exceptions stand out. Mark Prisk, (Sept 2012 to Oct 2013) with a background in building surveying, briefly championed housing issues during his brief stint. Similarly, Gavin Barwell, now Lord Barwell, showed promise during his tenure (July 2016 to June 2017), albeit very brief.

Yet, the true beacon of commitment to housing remains Harold Macmillan (1951 – 1954), whose tenure under Churchill saw a rare dedication to addressing the housing crisis. Tasked with an ambitious goal of constructing 300,000 houses annually, Macmillan not only met but exceeded this target—a feat achieved through genuine dedication and concerted effort.

However, since Macmillan’s era, the narrative has shifted. Housing ministers have come and gone, leaving behind a legacy of indifference that has allowed the housing crisis to fester. As successive governments fail to prioritize this fundamental need, the consequences are dire, with homelessness and unaffordable housing continuing to plague communities across the nation.

Legal Realities: Unbalanced Landlord Legislation vs. the Tenant Principle

Within the intricate legal landscape of housing, private landlords find themselves navigating an ever-increasing array of legislation. iHowz has tallied the legislative burden borne by private landlords and believes there to be a staggering total of 174 statutes. Each new piece of legislation adds strain on private landlords as they struggle to conform to the increasing amount of bureaucracy. From ensuring habitable living conditions to managing tenancy agreements, landlords face a myriad of legal considerations that demand an inordinate amount of time and attention. Indeed, it was to help private landlords conform to the increasing legal requirements that iHowz was established over 50 years ago!

In contrast, tenants are guided by a principle encapsulated in the phrase “tenant-like manner,” coined by Judge Denning in the landmark Warren v Keen case of 1953/4. This pivotal ruling emphasized tenants’ duty to maintain the property in a manner consistent with its intended use, establishing a cornerstone of tenant behaviour within the legal framework.

Yet, within the legal framework, a discernible bias emerges. The Housing Act 1988, for instance, significantly reshaped the rental market by introducing assured shorthold tenancies. A change that is often perceived as tilting the scales in favour of tenants. Similarly, The Landlord and Tenant Act 1985 outlined key rights and responsibilities for both parties but is often criticized for its perceived imbalance in favour of tenants.

Landlords Confusion Amidst Shifting Energy Standards

The maze of regulations concerning the Energy Performance Certificate (EPC) and The Minimum Energy Efficiency Standards (MEES) has left numerous landlords in a state of perplexity about what lies ahead. The ever-evolving landscape of future objectives and subsequent retractions only adds to the confusion. As the echoes of COP28’s ‘Net Zero’ goal fade, they leave behind a resounding global call for sustainability. However, the inconsistency in objectives and requirements leaves many landlords uncertain about the appropriate steps to take to ensure future compliance.

Over time, iHowz has consistently advocated for a clear governmental roadmap to address landlords’ concerns regarding energy efficiency. However, navigating the current and future requirements in this area remains a persistent challenge.

Despite good intentions, there’s uncertainty about whether Rishi Sunak will backtrack on the proposed changes to the Minimum Energy Efficiency rules. Such unpredictability prompts questions about the direction of government policy—is it veering off course? This uncertainty leaves UK landlords and the private rental sector in a state of concern and confusion. As mentioned earlier, rather than clear answers, more questions seem to arise. The fluctuating landscape of climate change initiatives adds to landlords’ worries and contributes to their increasing confusion. For a more detailed discussion on this topic, please see our recent article ‘Net Zero Plans: Still No Clear Guidance for UK Landlords‘