Despite a thriving private rented sector, landlords express growing discontent.
- Over 90% of landlords view the Labour Government’s policies as detrimental.
- Concerns include potential changes to Capital Gains Tax and rent caps.
- A significant number are considering reducing or exiting their portfolios.
- Tenant demand remains high, yet landlords’ optimism dwindles.
In an enlightening survey by Pegasus Insight, a significant mood of pessimism was uncovered amongst landlords despite robust fundamentals within the private rented sector (PRS). Over 90% of respondents indicated concern about the Labour Government’s stance, fearing adverse impacts due to policies perceived as anti-landlord. The prospect of tax rises, particularly regarding Capital Gains Tax (CGT), has emerged as a major worry, with 85% of landlords highlighting this issue as particularly troubling.
Further complicating the landscape are apprehensions about potential rent caps, mentioned by 79% of landlords, and the prospective abolition of Section 21 no-fault evictions, a cause of concern for 73%. Additionally, emerging mandates for landlord licensing (54%) and stringent energy performance standards, requiring properties to meet at least Energy Performance Certificate (EPC) Band C (51%), add to the landlords’ unease. These changes could catalyse a significant shift in the dynamics of property management and control.
The survey reveals that nearly 40% of landlords might cease investing in the sector if CGT reforms are implemented, with 48% of those owning more than four properties considering such a move. Alarmingly, nearly 20% of landlords expressed intentions to leave the market entirely, while others are contemplating downsizing their property portfolios. Concerns over financial constraints are leading to potential rent hikes, with 26% of landlords considering raising rents, thereby increasing tenants’ financial burden.
Despite this backdrop of uncertainty, demand in the rental market remains strong, with average rental yields achieving a 10-year high of 6.5%. Mark Long, founder and director of Pegasus Insight, highlighted the disparity between the thriving market conditions and the palpable anxiety among landlords regarding governmental policies. He stated, “This research reveals the depth of concern over the attitude and potential actions of the new government when it comes to the treatment of landlords.”
Moreover, the research underscores the strategic importance of the PRS in addressing national housing demands, as it caters to nearly 20% of the population. The findings suggest that any increase in CGT could prompt immediate rent increases by a quarter of landlords, exacerbating the already challenging supply-demand imbalance. Long further cautioned that without reassurance and support from the government, such actions might lead to a contraction in the available private rental stock.
The ongoing landlord pessimism, despite strong tenant demand, signals the need for balanced governmental policies to stabilise the private rented sector.
