PRS crisis deepens as landlords increasingly sell up
1 year ago | 3 comments
Small landlords disappear amid rise of corporate landlords providing temporary accommodation
12:01 AM, 9th July 2025, 9 months ago
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Industry experts warn small landlords are disappearing, while large corporate landlords are taking over.
At the Housing 2025 conference hosted by Inside Housing, industry experts claimed that private rented properties are being lost in London as they are bought by large institutions for use as temporary accommodation.
According to delegates at the conference, London has seen 40% of private rented homes disappearing from the capital.
Move the country to institutional landlords
Industry experts told Inside Housing that their biggest concern is institutional investors snapping up private rented properties and leasing them to local authorities for use as temporary accommodation, driven by the pressures of the Renters’ Rights Bill.
Hakeem Osinaike, strategic director of housing at Southwark Council, told Inside Housing: “There is a feeling that the reason why the legislation might be passed is to move the country to institutional landlords.
“We’re seeing signs of that, but we’re only seeing it in build-to-rent, because of all the properties that are disappearing. In London, about 40% of the PRS has disappeared, but they’ve all been bought by institutions, hedge funders, and now they’re offering those properties to local authorities for temporary accommodation.
“You’re buying properties, then evicting the tenants in there, who are then approaching local authorities for help as homeless families, and then you’re offering the same properties to local authorities as temporary accommodation, only now at a significantly higher rate.”
The PRS is shrinking
Pete Apps, a contributing editor at Inside Housing, asked Mr Osinaike during the session about the impact of the Renters’ Rights Bill on the private rented sector, particularly in light of research from London Councils that showed a sharp decline in landlords at the lowest end of the private rental market.
Mr Osinaike warns without the private rented sector, people will be forced into temporary accommodation.
He told Inside House: “As I explained earlier, people who have been living in what they consider to be their long-term homes, paying their rent, not doing anything wrong [are] being asked to leave, and all of a sudden they’ve been shifted into bed and breakfasts and hotels up and down the country.
“Local authorities are overspending by hundreds of millions of pounds on temporary accommodation for these reasons. The reason we have this crisis is simply because the PRS is shrinking.”
Tags:
corporate landlords, institutional landlords, landlord exodus, Private Rented Sector, renters rights bill, small landlords, temporary accommodiation
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Comments: 4
12:02 PM, 13th July 2025, About 9 months ago
This sounds like no one saw it coming. I’m no expert but it was painfully obvious a very long time ago that the legislation was developed to encourage the rise of the corporate landlords and it’s financial benefits that they would enjoy in social housing the government and councils cannot fulfil.
Member Since May 2018 - Comments: 2016
12:11 PM, 14th July 2025, About 9 months ago
Reply to the comment left by Mark Lynch at 13/07/2025 – 12:02
It’s hard to know for sure why it happened. Around about the time that George Osborne and the conservatives introduced legislation stopping small portfolio landlords (but not limited companies) from offsetting their finance costs there was a bit of discussion around about not wanting another housing bubble and also some discussion around young families not being able to afford to get on the housing ladder because residential property landlords were snapping up all the bargains.
Sometimes the stated reasons for policies are just a bit of BS that the latest MPs in power put out in the press to justify what they want to do because they think it will let them stay in power and pursue their other agendas; like the BS in the market being put out by labour politicians now.
If you’d been a conservative MP at the time George Osborne’s policy was introduced and doing a bit of ‘consultancy’ on the side, and if you were consulting for a large incorporated landlord or financial institution, then of course you would have wanted small portfolio landlords to be unable to offset their finance costs: This would be because as a large incorporated body you would have been able to snap up a lot of bargains as small portfolio landlords offloaded their properties. You shouldn’t read too much criticism into this by the way, as the SNP rent controls and the labour proposals for the RRB aren’t any better than the conservative policies.
Even if you were to look at one of the stated reasons for introducing s.24 that was part of the discussion or justification at the time, i.e. allowing owner occupiers to get onto the property ladder, then as a policy it failed. If anything worked eventually to encourage small landlords to offload properties it was the rise in interest rates and the prospect of the RRB. We should acknowledge that George Osborne’s policy did bite here eventually because of course if interest rates go up then the fact that you can’t offset your costs as a small portfolio landlord causes a housing crisis for many as investors pull out.
But the housing crisis that this policy causes is actually an inadequate supply of housing. This is something that was created by government. It was a failure of government policy.
Although one of the discussions that was around at the time George Osborne’s policy was introduced (not wanting another boom) is still something to think about. What we actually need is a boom in energy efficient housing.
So the smartest thing that any competent government could do (and yes, there still needs to be reform to the EPC system) is to ditch all plans for banning landlords from renting out properties at EPC band D or below and instead allow all landlords to offset their finance costs if they are at Band C or above, regardless of whether they are incorporated or not incorporated.
There must be some competent politicians out there (competent in the sense of being competent greasy-pole-climbers) in realising that they can change policy to make it more tax advantageous to hold a band C-plus property and blame the failure of previous policy on George Osborne (whether it’s right or wrong to do that).
I’m not seeing much evidence of competence out there yet.
Member Since May 2018 - Comments: 2016
11:05 AM, 15th July 2025, About 9 months ago
Reply to the comment left by Peter Merrick at 12/07/2025 – 19:19
What the available figures on property ownership show is that there has been a growth in incorporated property ownership, including incorporated entities owning as little as one property. Whether it’s good or bad probably depends upon the behaviour of the company, and whether it increases investment in the kind of housing that’s needed.
The growth in incorporation is something that is being driven by both conservative and labour. It penalises the small portfolio landlords, and in my view it drives out competition.