Renters’ Rights Bill passes second reading in the Lords
1 year ago | 23 comments
PRS crisis deepens as landlords plan exit and rents surge
9:01 AM, 6th February 2025, 1 year ago
19
The deepening crisis in the UK’s private rented sector has been laid bare with a survey revealing that landlord confidence has taken a knock with 67% believing the PRS has worsened.
The survey by Total Property highlights that nearly half (49%) of landlords are planning to leave the PRS within five years.
The firm questioned 3,500 landlords, tenants and agents to reveal a sector under pressure – with many landlords worried about the legislative changes under the Renters’ Rights Bill.
Just 3% of landlords have entered the market recently, compared to 75% who have been operating for over a decade.
PRS is undergoing significant change
The firm’s chief executive, Eddie Hooker, said: “The private rented sector is undergoing one of the most significant periods of change we’ve seen in decades.
“Rising costs, increasing regulation and shifting tenant expectations are reshaping the market, and this survey reveals just how deep these challenges run.
“With nearly half of landlords considering leaving the sector in the next five years or reducing the size of their portfolio, and tenants struggling with affordability, urgent action is needed.”
He added: “What’s particularly concerning is that the vast majority of landlords have been in the market for over a decade, while new investment has slowed to a trickle.
“The fact that so few new landlords are entering the sector is a clear indicator of where the market is heading.”
Landlords planning to leave
Of those landlords planning to leave regulatory changes play a big part, including the abolition of Section 21 ‘no-fault’ evictions (29%) and the Renters’ Rights Bill (24%).
For a third of landlords, compliance burdens are an issue, along with rising costs (19%) and tax changes (15%).
Total Property brands include government-approved schemes mydeposits, Property Redress and Client Money Protect plus Total Landlord and Landlord Action.
Mr Hooker said: “While strengthening tenant rights through increased regulation is vital, on the other side of the coin, landlords have little incentive to reinvest in the market under current conditions.
“Unless this changes, these protections will mean little, as we risk a crisis where tenants have nowhere to rent at a price they can afford.”
He adds: “Regulation must support both landlords and tenants fairly to strike the right balance and create a sustainable rental market for the future.”
Tenants are facing affordability challenges
The survey also reveals that tenants are facing affordability challenges, with 88% citing rising rents as their biggest concern.
A lack of available properties is creating hardship, impacting 49% of renters.
Despite these difficulties, 64% of tenants feel secure in their current homes.
And just 6% of tenants feel the right to request a pet is the most important provision of the Renters’ Rights Bill.
Letting agents report difficulties navigating regulatory changes, with 76% citing compliance as a primary worry.
A shortage of rental properties impacts 61% of agents, and 73.5% feel less supported by the current government.
Tags:
affordability, Housing, Landlords, Letting Agents, Property market, property survey, PRS, Rent Prices, rental crisis, Rental property shortage, renters rights bill, section 21, tenants, UK rental market
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Member Since May 2015 - Comments: 2197 - Articles: 2
1:07 PM, 7th February 2025, About 1 year ago
Reply to the comment left by John Gelmini at 06/02/2025 – 16:40
Whist I agree with your sentiments, they will not get me, I am far too canny.
Member Since January 2024 - Comments: 347
2:58 PM, 7th February 2025, About 1 year ago
Reply to the comment left by TheMaluka at 07/02/2025 – 13:05
I’m a tax adviser, so of course I know about s24.
However, I struggle to see how you arrive at 100% tax.
Tax on profits before interest is likely to be a maximum effective rate of 60% (if you are losing your personal allowance due to rental profits taking your income over, say, £100k). Tax relief on interest is given at 20%. So generally the maximum tax rate is 40%.
Member Since October 2024 - Comments: 49
4:31 PM, 7th February 2025, About 1 year ago
Reply to the comment left by TheMaluka at 07/02/2025 – 13:07
I’m glad to hear it .
Just don’t underestimate the government’s greed,mendacity,dishonesty and propensity to enact retrospective legislation which the previous government did with IR35
Member Since May 2015 - Comments: 2197 - Articles: 2
11:13 AM, 8th February 2025, About 1 year ago
Reply to the comment left by Ryan Stevens at 07/02/2025 – 14:58
As I am sure you are aware, section 24 results in a tax on turnover not profit.
Member Since February 2025 - Comments: 1
11:31 AM, 8th February 2025, About 1 year ago
So, I have just got one of my properties
a new EPC. The rating has come out as a D . The expected costs to achieve a C rating in this 1950s house is coming out at approx £14000.
My tenant ,who is in her late 70s has lived there since 2006, she pays roughly £200 less than the average local rent. With the improvements her savings would be approx £203 per year.
I will now have to give her notice and sell the property. She has already tried to get a council property but been refused. She loves living in this house and will cry when I give her the news . Labour have certainly brought about change .
Member Since July 2024 - Comments: 112
4:37 AM, 10th February 2025, About 1 year ago
Reply to the comment left by TheMaluka at 06/02/2025 – 10:56
firstly congrats! and well done truly – all EPC C amazing, new kitchens – for sure you and or your family have the skills to do this. But mostly you are probably the FIRST honest landlord /lady I have seen in well, maybe forever. I am selling up. As such I’ve been running my numbers and having run business for over 30 years I account for everything so my spreadsheets are accurate. I too am shocked on the making no money bit, as is someone close to Me who has been running numbers. We have 60 beds between us. The real money for me has been a grotty BTL but this income paid back a loan I put into it for the other investors so is it really profit? nope. The next real money is capital gain, on which I dont pay any tax – no Corporate Tax. I’m studing the markets now, investing, not trading and we would have made much more investing in something like ETF’s than property. But once again I take my hat off to Maluka Honey
Member Since January 2024 - Comments: 347
10:00 AM, 10th February 2025, About 1 year ago
Reply to the comment left by TheMaluka at 08/02/2025 – 11:13
No, it doesn’t. It results in a tax at your highest marginal rate on rental profits before interest.
So, if you have rental income (‘turnover’) of £50000 and expenses (excluding interest) of £20000 then you would be taxed at your highest marginal rate (say 40%) on your £50000-20000=30000 profit @40%=£12000 tax before interest credits.
If you have £25000 of interest you will get a 20% tax credit for it i.e. £5000. So you will have a £7000 tax bill on a profit after interest of £5000. In this particular example the tax rate is £7000/5000=140%.
Member Since May 2015 - Comments: 2197 - Articles: 2
10:26 AM, 10th February 2025, About 1 year ago
Reply to the comment left by Ryan Stevens at 10/02/2025 – 10:00
I am only a Chartered Physicist, but in my world 140% looks to be larger than 100% and in your example I believe the overall loss would be £2k.
Income £50k, expenses £20k, interest £25k, Tax £7k giving a total of minus £2k, i.e. an overall loss.
I know many landlords in this situation.
Member Since January 2024 - Comments: 347
10:45 AM, 10th February 2025, About 1 year ago
Correct, in this case it is. But you stated a 100% tax on turnover, so I was just correcting the misconception that many have over how the tax credit for interest actually works.
My example stated the profit before tax was £5k. There is a loss after tax of £2k.