"IMLA is reiterating a call we have been making for some time, for policymakers to take action to ensure those landlords feel confident enough to remain in the sector and continue to offer this essential housing for the country’s renting population"
- Kate Davies - IMLA
A new report from the Intermediary Mortgage Lenders Association has examined the changing nature of government intervention in housing, prospective changes in regulation such as the Renter’s Rights Bill and potential future Energy Performance requirements for the PRS.
IMLA believes that in order to achieve better outcomes for tenants, the government should:
1: Give greater recognition to the importance of the PRS, which provides homes for just under 20% of UK households. While it is fair to expect landlords to treat their tenants decently, a one-size-fits-all approach to all private landlords will cause anomalies and unfairness.
2: Acknowledge that small landlords form the backbone of the sector. IMLA’s landlord survey (published in December 2023) showed that 80% of landlords own either one or two rental properties. Only 13% are portfolio landlords with four or more properties and they own 39% of the stock, with 61% owned by smaller suppliers.
3: Recognise that, as with any industry, increased regulatory costs and risks will push up prices. The PRS is subject to over 100 regulations, most introduced since 2004. Some of the regulatory changes proposed in the Renters’ Rights Bill may be justified but the additional costs that these regulations impose on landlords will inevitably be passed on to tenants in higher rents.
4: Accept that increased risk for landlords will require higher returns. The most extreme policy risk for landlords is rent controls, the spectre of which is likely to deter some new investors while forcing some existing landlords to exit the sector. For others it will raise the required rate of return, meaning higher rents for tenants - the exact opposite of the intended outcome of the policy.
5: Acknowledge the ability of the market to drive up standards in the PRS. The greatest safeguard against substandard housing is the tenant’s right to shop around for the best property that fits their budget, though this ability is restricted when demand significantly outstrips supply. When new regulatory requirements drive rents up, the range of properties that fit within any given tenant’s budget is reduced, undercutting the objective of raising standards.
6: Apply policy more fairly across tenures. The proposed deadline by which PRS properties may be required to achieve a minimum EPC C rating discriminates against the sector and has the potential to reduce supply, as landlords of low-rated properties can sell into the owner-occupied sector where no such rules apply.
Kate Davies, executive director of IMLA, said: “The government’s long-term plan to massively boost much-needed social rented accommodation is very much welcomed, but cannot come at the expense of the UK’s private landlords, who currently play a vital role in providing homes for 20% of the country’s households.
“IMLA is reiterating a call we have been making for some time, for policymakers to take action to ensure those landlords feel confident enough to remain in the sector and continue to offer this essential housing for the country’s renting population.
“Continuing to heap expensive regulation on the sector risks pushing out more of the smaller landlords who make up the lion’s share of providers, creating a vicious circle of fewer rental properties available and higher rents for tenants.”
