The Property Redress Scheme, one of two approved ombudsman-style schemes for the private rental sector, has published the findings from a major survey.
Some 2,700 landlords and letting agents were consulted and according g to PRS the results highlight “a pivotal crossroads for the PRS, with a clear call for legislative reform and greater government support.”
Compliance with regulations emerges as a significant burden, necessitating streamlined processes and policy adjustments. The sector's resilience is evident, but concerns over financial sustainability and market viability persist.
Here are key highlights from the survey, with the Property Redress Scheme’s own commentary.
Self-management increased from 56.3% in 2022 to 65% in 2023, which in the era of compliance and legislative reform is surprising. But nearly a fifth of landlords (19%) adopt a hybrid approach, perhaps something more may consider in future. However, it would seem landlords like self-managing, with a substantial majority (84.8%) expressing confidence in their property management choices.
Fitness for purpose - Only 43.3% of landlords and 52.2% of agents feel the sector is ‘fit for purpose’. Reasons cited include regulation, poorer tax breaks, increased mortgage costs, upgrade costs and removal of Section 24. This is a significant drop on last year when a strong majority of agents (76%) and landlords (72%) felt it was fit for purpose, citing regular income and protective regulations as key reasons.
Value for money - At the start of 2023, the majority of landlords felt that renting offers good value for money for tenants (85.8%). Many offer below market rents, have long standing tenants, or have absorbed mortgage interest increases. Just 14.2% of landlords changed their minds over the year. 73.2% of agents also believed at the beginning of 2023 that renting offered good value for money for tenants (compared to almost 90% at the beginning of 2022), but 23.2% of them have since changed their opinion. This is due to factors such as reduction in supply and tenants outbidding each other.
Financial return - Despite the majority feeling that renting offers good value for money for tenants, only 51.7% of landlords were satisfied with their financial return in 2023 (a drop from 79.2% at the beginning of 2022), compared with 63.1% of agents.
Government support - 61.9% of landlords said they felt ‘not supported at all’ by the Government (an increase from 43% in 2022) with 78.6% saying that legislation ‘hinders’ landlords, compared with 48% in 2022. 50.2% of agents feel they are not supported at all by government.
Biggest challenge - The overwhelming majority (67.5%) of landlords indicate that legislation is the biggest challenge they face. This is a steep increase compared to the 2022 survey, when legislation was a top concern for well under half (39%) of landlords. Agents also said legislation is the biggest challenge (58.3%), overshadowing traditional concerns such as property maintenance and rent payments. This contradicts why the majority of landlords still choose to self-manage. However, despite finding legislation challenging, 89.4% of landlords said they are very or quite confident in compliance with legislative requirements.
Section 21 - A majority of landlords (80.5%) and agents (71.9%) view the abolition of Section 21 negatively. This is a significant increase from 39.2% of agents and 49.2% of landlords in our 2022 survey.
Pets in lets - Only 8.7% of landlords are in favour of having pets in their property, compared to 30.4% in 2022. 49.6% said they were strongly or very strongly against, a slight increase on the 40.1% who were strongly or very strongly against in 2022.
Future outlook - Despite challenges, 57.1% of landlords see themselves continuing their journey in the rental sector in three years’ time. This is a significant decline on our 2022 survey, where a strong majority of landlords (80%) envisioned themselves continuing in their role. A majority of agents (67.8%) see themselves still being in the role in three years compared to 76.7% in 2022.
Scrapping Section 21 is landlords' headache - and backfiring on Gove
The removal of Section 21 notices and the end of fixed-term tenancies are the two issues that concern landlords the most, according to a new report issued by Propertymark. The trade body’s latest study found that 72% of landlords were worried about the end of Section 21 notices, and 69% viewed the removal of fixed-term tenancies as an issue.
Under the Renters Reform Bill, fixed term tenancies, including assured and assured shorthold tenancies, will be abolished, and replaced by periodic tenancies with no fixed end date. The Bill will also abolish section 21 ‘no fault’ evictions.
Around 1 in 5 (18%) of landlords agreed that they understood the Renters Reform Bill, while only 3% of those surveyed had read the guidance surrounding the legislation.
52% of landlords surveyed disagreed that the guidance that accompanied the Bill was sufficient placing an emphasis on landlords using a professional letting agent to navigate future changes.
Commenting on the report’s findings, Timothy Douglas, Head of Policy and Campaigns at Propertymark, says “Propertymark has long argued that a fixed term tenancy allows security of tenure for the tenant and a guarantee of rent payments for the landlord. The Renters Reform Bill will only be workable in practice if it addresses the on the ground challenges, we know affect landlords. Furthermore, it is imperative that landlords are aware of the upcoming legislation and are given the adequate guidance and support to deliver a high level of service for tenants. Propertymark agents have a key role to play in the implementation of the legislation.”
Meanwhile the right-wing current affairs magazine The Spectator, the ending of Section 21 is cited as a mis-step by Housing Secretary Michael Gove.
Writer and property expert Ross Clark says in the magazine “this would essentially return tenancy law pretty well back to where it was in the 1980s, when many people with spare properties were loathe to let them out for fear they would be unable to take back possession when they needed to. While the rental market has always had its Rachmans, happy to turn out a family of house and home on a whim, there are very genuine reasons why people might want a property back after, say, 12 months.
Gove has instituted reforms which favour tenants and would-be home-owners over landlords - but that this is backfiring. Gove has decided to side with frustrated would-be homeowners. But there is another group with whom you might expect the government to have a little more sympathy: private pensioners. If, unlike Gove, you do not face the prospect of a featherbedded retirement courtesy of a gold-plated pension underwritten by the taxpayer, you are forced to make other provisions. The miserable performance of the UK stock market has pushed many people of quite modest means into buy-to-let. These make up a large proportion of the landlords on whom Gove has declared war. He cannot expect a lot of thanks for this at the ballot box.”