0:01 AM, 7th March 2023, About 7 months ago 7
If amateur or accidental landlords are eradicated from the private rented sector (PRS), there would be 383,600 fewer homes to rent – and £223.5bn would be wiped from the value of the PRS market, research reveals.
The findings from specialist property lending experts, Octane Capital, suggest that a string of legislative changes could lead to that scenario.
The firm says that the PRS in the UK currently accounts for 18.8% of all dwellings – or 5.6m homes.
There are 2.74m landlords and each landlord owns an average of just over two properties.
However, the lender says that the PRS is ‘on the brink of a significant decline‘ because the government has introduced a string of legislative changes rather than tackle the country’s housing crisis head on.
It says that the government’s tactic has led landlords from being deterred from buy-to-let investment because profit margins have been impacted.
And this drop in profits has hit the amateur landlord hit hardest, the firm says.
It warns that an estimated 14% of the sector are ‘amateur landlords’ who own just one rental property.
This equates to 383,600 landlords – the same number of privately rented homes.
And if they should leave, Octane is asking what the impact will be on the rental market?
It says that the number of homes to rent would drop by 14% and since the average price for a BTL property is £285,915 means the PRS’s market value would take a £223.5bn hit in one fell swoop.
Jonathan Samuels, the chief executive of Octane Capital, said: “In recent years, the UK government has looked to eradicate the amateur landlord via a string of legislative changes, designed to dent profit margins in order to help address the shortage of stock within the sales market.”
He continued: “Firstly, this is not a practical or reasonable solution when really the answer is to build more homes.
“Secondly, in doing so, it’s the nation’s tenants who are paying the price, with a shortage in stock only driving the cost of renting ever higher.”
He adds: “Should amateur landlords cease to exist, it would further reduce PRS stock levels by a significant amount and only exacerbate the problem further.”