"While government justifications for new regulation usually focus on improving the standards of the small minority of rogue landlords, they need to realise the extra compliance burden they are putting on the vast majority of good landlords"
- Neil Cobbold - PayProp UK
PR: Tell us a bit about yourself, your history within the UK property industry, and your current role.
NC: I’m Neil Cobbold, the managing director of PayProp UK. I’ve been in the property industry for decades, starting out at university as an estate agent. I’d always had a fascination with property and it seemed like a good way to get hands-on business experience while I was studying.
That positive experience early on led me to set up a housing association that specialised in renting properties from private sector landlords to those on the local council housing waiting list. The company grew rapidly until it was acquired by Mears Group PLC.
After that, I joined PayProp as employee six in the UK. When I joined in 2015, PayProp had already been in business for over a decade in South Africa, so the potential for the UK was enormous. It’s been a career highlight to have played a key role in PayProp’s growth across the UK.
PR: What would you say are the main challenges facing UK landlords in 2024?
NC: Affordability and regulation are likely to be the biggest issues facing landlords in 2024. The latest data from the ONS shows that private renters on a median household income could expect to spend 26% of their income on a median-priced rented home in England for the financial year ending March 2022, compared with 23% in Wales and 25% in Northern Ireland But this situation has almost certainly deteriorated since then, with the Office for National Statistics in December reporting the joint-highest annual percentage change since 2016.
As a result, there may be limited scope for landlords to increase rents to deal with mounting costs. This will be especially true for leveraged landlords who could be facing significantly higher mortgage payments.
But it’s not all doom and gloom, we’ve already seen banks cutting mortgage rates and expect this trend to continue with many lenders predicting an interest rate cut at some point in the year. Also, while rents may not rise at the same rate they did in 2023, many, including Rightmove, still predict market rents will increase in 2024.
The other challenge, especially in England and Scotland, is the new legislation likely to come into play this year. English landlords will see Section 21 removed in the Renters (Reform) Bill, but the implementation could be delayed until a later date.
They will also see their compliance checked with a new landlord portal and be asked to sign up for a new ombudsman service to rule on any tenant/landlord disputes. Landlords in Scotland may also have to get to grips with a new version of rent controls that tapers the rent increases they can ask for.
While government justifications for new regulation usually focus on improving the standards of the small minority of rogue landlords, they need to realise the extra compliance burden they are putting on the vast majority of good landlords.
PR: You said in a recent article that: "In order to create a thriving PRS, we need to encourage the remaining landlords to stay in the sector." With many feeling like the government is 'anti-landlord' how can this best be achieved?
NC: I think it’s less about the government being 'anti-landlord', and more about it being ‘pro-tenant’ – or, in the case of removing non-incorporated landlords’ ability to offset mortgage payments against tax, ‘pro-Treasury’ – but the net result is the same.
Good landlords make up the vast majority of this sector, and they might feel punished for providing high-quality homes to tenants while rogue landlords carry on as before, regardless of any new compliance burdens, as enforcement is patchy at best across the PRS.
What many landlords would be keen to see is a reversal of Section 24 to allow owners to claim back any mortgage interest costs. While it may not persuade all disenchanted landlords to stay in the PRS, it may attract new ones and help committed landlords to afford taking on more properties.
Helping landlords in this way could also indirectly help them manage their compliance burden, as higher yields could be invested in hiring a letting agency to fully manage their portfolio.
Ultimately, it’ll need to be words and deeds from the government to show those in the PRS that they are not ‘anti-landlord’.
PR: Are things likely to get easier for landlords under a new government?
NC: Whether things will get easier under a new government will depend a lot on who forms it and whether the Renters (Reform) Bill is on the statute books by the time we come to vote.
On the one hand, there seems to be broad agreement across the political parties that if the Renters (Reform) Bill in England passes, further reform of the PRS will be unlikely in the short term.
On the other hand, if it does not pass before the next election, any future government is likely to revive it, with Labour keen to move faster than their rivals. Deputy Leader and Shadow Secretary of State for Levelling Up, Housing, Communities & Local Government, Angela Rayner, has already promised that Section 21 will be abolished on the first day of a Labour government, with more reforms likely soon after.
PR: What are your predictions for the UK property market over the next 12 months?
NC: The UK property market is likely to prove resilient in 2024. Many have predicted falling house prices this year, but with lower inflation than in 2023 and banks already pricing in predicted interest rate falls this year, we’re expecting house prices to stay flat or grow rather than fall over the whole of 2024.
On the rental side, it depends on where you are in the UK. Scottish officials were recently consulting on another year of rent controls. In England, landlords could see eviction changes make it more difficult for them to recover property.
Meanwhile, at the end of 2023, the Welsh government introduced a green paper on ‘Fair Rents’, which included rent control measures. And finally, with the Northern Ireland Assembly close to being restored, a revived assembly could look at intervening in the PRS. According to the ONS, private rental prices in Northern Ireland increased by 9.3% in the 12 months to October 2023 – the highest increase of the four countries.
Added to that, we have the spectre of a general election. Politicians from all sides will be looking to catch the eye of floating voters with policies that don’t cost the Treasury a penny while still reducing the cost of living. No doubt legislation of that nature may crop up, for example raising energy standards in the PRS in order to cut tenant bills, or at the more extreme end, rent control proposals, as we’ve seen Sadiq Khan do in London.
2024 is already shaping up to be an interesting year for the property market, but whatever happens, people will still need homes to live in. Provided landlords can make a return on
their investment, there will still be some who are willing to provide properties to rent. The question is, how many landlords will be tempted to cash in and sell up if yields are low, the regulatory burden is high and property prices start growing in 2024?
PR: As a previous winner of a Property Reporter Award and now one of our judges, what are you most looking forward to from this year's event?
NC: Being part of the Property Reporter Awards judging panel this year is a real honour, as is PayProp’s shortlisting. It’s been a treat going through the entries and seeing the incredible, innovative work that is taking place across the industry.
We are also pleased to sponsor the Best Lettings Agency category again. It’s important to recognise the vital work letting agencies across the country are doing in a market faced with too many tenants for too few properties in 2023.
This year’s award ceremony promises to be a must-attend event for the industry. I’m really looking forward to seeing who takes home what award. The competition this year has been fierce, so even being shortlisted should be seen as a great achievement for the companies and individuals who entered.
