Shrinking buy-to-let could see a buy-to-let mortgage drought

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As landlords continue to exit the buy-to-let market, to the detriment of their tenants, could this rout also lead to buy-to-let mortgage lenders following their lead?

This is a question posed by Chloe Cheung writing for the FT this last weekend. It’s a serious question, a development that could be a further twist in the downward spiral of reduced rental supply, and an even bigger crisis in renting. Her research reveals there could be more than a grain of truth in the theory.

Despite claims by some sceptics in the media: “We can’t let landlords define the narrative on renting,” says one headline.

“Thought landlords were selling up and making it even harder to rent? Think again,” the article goes on, one promoted by opendemocracy.net. This is a website that says it reports on social and political issues and, as it says, is “seeking to challenge power and encourage democratic debate” and whose founders have been involved with established media and political activism, that’s according to Wikipedia.

“The narrative that landlords are selling up because of tax changes or the upcoming Renters’ Reform Bill, which will ban ‘no fault evictions’, has been repeated time and time again recently, from MPs to landlord bodies and even the Bank of England,” says opendeomcracy’s article.

“But after the chief executive of the UK’s biggest landlord lobby admitted he had misrepresented the facts – and that the sector was actually growing slightly – the claim has fallen apart.” says the website.

The website even claims the new Housing Minster Rachel McClean is backtracking on the narrative that landlords are leaving stating that: “If one leaves, I’m almost certain another one will come in. So this idea that our regulation will drive them out in the sector – I don’t accept that,” she apparently said.

Back to reality

All that’s far from the evidence we are seeing on the ground, and definitely not the situation many tenants are experiencing. Writing in the Sunday Times this week Laura Hacket says, and she includes herself in this, tenants are degrading themselves “to get a foot in the door.”

She says that it was only when she and her friends resorted to writing a “simpering personal statement” just to get the chance to rent a flat that it dawned on her: “Britain’s rental market is broken,”!

We constantly hear stories now of queues of tenants are outside rentals on viewing days in our major cities – up to 17 in one report this writer heard. These reports from landlords and letting agents cannot all be exaggerated and defy the logic of this wishful thinking in the open-democracy story.

According to recent research by the National Residential Landlords Association (NRLA), around 30 per cent of buy-to-let landlords are planning to either cut down their portfolio this year, or leave the market altogether. This, it says, would represent the biggest landlord sell-off in over six years.

The rot started in 2017 with George Osborne, the then Chancellor’s Section 24, a hard hitting hitting tax measure to remove landlords’ ability to claim full tax relief on mortgage interest payments. This was the start of a steady stream of buy-to-let landlords deciding to exit the private rented sector.

Some 220,000 landlords left the sector in the first two years of the legislation taking effect according to the NRLA, and many more have been leaving since. In addition to the deterrent of Section 24, the Government introduced a slew of new regulations that have made, in particular, the ‘accidental” and small-scale landlord, most with less than three properties, to think twice about staying or making new investments.

Since then we’ve had Covid, an upcoming Renters Reform Bill, which will abolish Section 21, plus measures to increase energy efficiency standards which will demand significant new investment for some landlords, and more recently, rocketing mortgage rates.

A potential mortgage drought

If landlords do continue to exit the private rented sector at the current rate it will undoubtedly have an impact on the buy-to-let mortgage market. Lenders will start to cut back on their offerings and lack of competition will increase rates.

The potential for amateur or accidental landlords to continue to exit the PRS market could see a reduction in buy-to-let mortgage business for small-scale borrowers resulting in lenders tightening their criteria for those remaining in the market. So Jon Cooper, head of mortgages at lender Aldermore told the FT newspaper.

“Specialist lenders that focus on limited company BTL and portfolio landlords, which by tradition have a more flexible lending approach, may receive more business as a result,” he says. “If this were to occur, it would have a knock-on effect on some specialist lenders’ operational rhythms and delivery timescales,” he said.

Also, Stephanie Charman, strategic relationships director at Sesame Bankhall Group told the FT: that she has witnessed a “small number of amateur landlords selling properties due to pressure from interest rates, the potential for significant spending to bring properties up to EPC specifications, and concerns around increases in rent arrears. However, if amateur landlords continue to exit further, we could see mainstream lenders who don’t offer a more specialist product range look to pull back from the market.”

How will mortgage rates be affected?

Fewer landlords will affect the demand for mortgages resulting in fewer suppliers, reduced competition and higher mortgage rates will further exacerbate the decline, its a downward spiral that will continue unless something changes.

For the small-scale buy-to-let landlords that change can only be one thing, a re-assessment of Government policy towards the PRS, one that would encourage rather the present situation where small-scale landlords are being discouraged, resulting in the present crisis in the rental market.

On the other hand, the UK’s biggest buy-to-let landlord in the UK, Grainger Plc is planning to expand its market share. They expect the market to continue to grow, their estimates from 4.7 million households to 7.2 million to 2025.

While still relative insignificance in numbers, compared to the millions of small-scale landlords with no more than a handful of properties, these institutional landlords have the advantage of scale and the tax rules are more in their favour. It doesn’t take a genius to see which way the PRS is heading. Is there a secret plot – despite constantly reassuring landlords how much they are valued – that the Government wants it that way?

View Full Article: Shrinking buy-to-let could see a buy-to-let mortgage drought

Landlord jailed after ignoring court order to improve rat-infested property

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A rogue landlord has been jailed for 10 months after he failed to comply with conditions set by a court concerning his rat-infested property.

Martin Ambler admitted four counts of breaching a criminal behaviour order in May 2022 but sentencing was deferred so that he could instruct housing experts or a management company to inspect and provide a report on all his properties within Bolsover District, Derbyshire.

He was also ordered to cooperate with the council to provide full financial information about any companies of which he was a director and was told not to commit any further offences.

One of Ambler’s houses on the West Lea estate in Clowne (pictured) was infested with rats, droppings were found on a mattress, a child’s artwork had been chewed and the rodents had even caused a leak by chewing through a water pipe.

The family home contained numerous Category 1 hazards including holes in the walls, gaps in decaying windows, doors that didn’t close properly and leaking external doors.

At another property, he left large amounts of fly-tipped rubbish in the gardens while metal shutters were attached to the windows.

Similar behaviour

However, since this court appearance at Derby Crown Court last August, the landlord has been in breach of his criminal behaviour order and the judge’s instructions by not providing the relevant information on a number of conditions, Chesterfield Crown Court heard.

The landlord has a history of similar behaviour; in 2017, Ambler was slapped with a £2,500 fine and handed a criminal behaviour order after North East Derbyshire District Council’s environmental health team received 11 complaints about waste accumulating at a property in North Wingfield. Other tenants also complained about damp and mould, lack of heating, blood-stained walls, and faulty electrics.

View Full Article: Landlord jailed after ignoring court order to improve rat-infested property

LATEST: Greens say ‘immediate’ rent freeze is only answer to housing crisis

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Landlords wanting to back the eco movement may want to pause for thought after the Green Party today vowed to bring in an immediate rent freeze and no-fault eviction ban to tackle the housing crisis.

During an election campaign visit to Suffolk, party co-leaders Carla Denyer and Adrian Ramsay told supporters that it believed – like Labour – that councils should be handed powers to cap rents in areas where the market was overheated.

In the short term, the Greens would replicate the six-month winter rent freeze supported by the Scottish Greens in Scotland. In the longer-term, it would give councils powers to control rents in expensive areas.

Denyer said too many people were “trapped in housing unaffordable to rent, and unaffordable to heat”.

The party also wants tighter planning rules on the location of new housing, 100,000 council houses built every year to increase the supply of affordable housing funded by increasing taxes on wealth and to boost energy efficiency by requiring solar panels and heat pumps to be installed on new build homes.

Scots freeze

However, in Scotland where a rent freeze has just ended and for the next six months, rent increases in the PRS will be limited to 3%, rent controls don’t appear to be working.

Rents in the private sector rose at a faster rate than the rest of Britain, almost 5% in the 12 months to February 2023. In the six months before the legislative change, it had the lowest monthly average.

View Full Article: LATEST: Greens say ‘immediate’ rent freeze is only answer to housing crisis

Tribunal ‘concerned’ councils using licencing to generate income not improve PRS

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A First Tier Property Tribunal has slammed Nottingham Council for covering large swathes of the city with licensing schemes rather than targeting rogue landlords, a ‘temptation’ it says is faced by other local authorities.

Justice for Tenants brought a case on behalf of a tenant couple who applied for a £12,946 Rent Repayment Order after they discovered the property in St Jude’s Avenue (main picture) did not have a licence. However, the tribunal reduced the award to 90% and criticised ‘blanket schemes’.

After ruling that the offence of not having a selective licence was not unduly serious on its own “when taking account of the range of potential offences such as harassment or unlawful eviction” the tribunal at first reduced the award to 40%.

However, it added: “We are also concerned that Nottingham City Council appears to have imposed a selective licensing regime over a substantial part of its area rather than targeting particular areas where problems of poor housing and anti-social behaviour are found.

“We are concerned that local authorities adopting this approach may be tempted to regard the licensing regulations as being a regular source of income rather than dealing with the issues for which they were intended.”

Landlord defence

The landlord, Mrs French, explained that the scheme had not been in place when she first let the house in 2017, that she had kept it well maintained, had not increased the rent for years and had been living in America during the time.

Taking the landlord’s financial circumstances into account – less than £2,000 in savings – and the fact she had only rented out the property for 41 months due to a move abroad for her husband’s work, the tribunal reduced the award to £774.

It added: “The purpose of a rent repayment order is to deter landlords from unlawful action and to prevent repeat offences…she is not letting property at the moment and there is little chance that she will do so in the foreseeable future.”

Read the Tribunal decision in full.

View Full Article: Tribunal ‘concerned’ councils using licencing to generate income not improve PRS

Since when did a rent freeze mean don’t pay rent?

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It has been a busy time for landlords with several stories that would normally make my blood run cold, but let’s start with a question: ‘Since when did a rent freeze mean no need to pay rent?’

I ask this

View Full Article: Since when did a rent freeze mean don’t pay rent?

Propertymark calls for an end to the freeze on local housing allowance

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Propertymark, the body for letting agents, says ‘enough is enough’ and is calling for an end to the freeze on local housing allowance (LHA) and it wants more support for renters.

The organisation’s policy and campaigns officer, Tim Thomas

View Full Article: Propertymark calls for an end to the freeze on local housing allowance

Have you been hit by the ‘cost of landlording’ crisis? Here’s some help

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There is a lot of talk at the moment about how rents are up by 11% across the UK and although I know it’s tough on renters, landlord costs have, in many cases, doubled.

This includes mortgage premium payments following interest rates rises from 0.5% to 4% in just 12 months, and HMRC abolishing landlords’ Section 24 tax reliefs. Consequently, one in 10 landlords are now saying that they are selling up.

Alphaletz is a software company for landlords, and we have today announced that we want to do our bit to help, giving away a FREE Premium account which includes Open Banking for up to three properties.

As the founder of Alphaletz and a portfolio landlord too, I realise being a landlord is now harder than ever and we all need to treat our property investments as professional businesses.

There is just too much compliance and regulation to manage on a spreadsheet and the market is well overdue some new modern software to make landlords lives easier.

Bold decision

That’s why we made the bold decision to give our product away so that landlords can set up their own accounts and see how simple it can be.

I really hope that this will help keep landlords in the market, there is a desperate shortage of rental properties and landlords are selling up because it’s just too hard!’

Alphaletz was founded over three years ago to solve the problem that many landlords face of having to manage their portfolios on spreadsheets or other home-made systems that were never designed for property management.

The world has gone digital and even HMRC are talking about Making Tax Digital in 2026 for landlords too. Sooner or later, we will all have to migrate to new ways of working, so we want to help people get started now and see just how easy it is.

 ‘Landlords need a better and easier way of working and are trying really hard to keep up with all the changes, we could tell by the overwhelming response we had from new users setting up new accounts after the webinar’ he also said ‘we also gave away lots of free resources too like Tenant Application Forms, Inventory Report templates and more that users could download. Landlords want more control, and we are building a community and product to help them’

Who is Richard Jackson?

He is the co-founder of Alphaletz, a software system designed specifically for landlords and property managers to help them save time and money. It is an official partner with LandlordZONE.

Richard co-hosted a webinar last week on the Renters’ Reform Bill with Paul Shamplina with over 1,000 registrations.

View Full Article: Have you been hit by the ‘cost of landlording’ crisis? Here’s some help

Housing market picks up with prices rising in March

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The UK’s average house price grew by 0.8% in March, the second month running that prices have picked up after February’s 1.2% rise, Halifax says.

However, the lender says that the annual rate of house price growth continues to slow and was 1.6% in the year to March.

View Full Article: Housing market picks up with prices rising in March

Campaign launched to fight policies ‘damaging Scotland’s PRS’

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Landlords in Scotland are being urged to back a National Residential Landlords Association (NRLA) campaign that will challenge policies from the Sottish Government that damage the country’s private rented sector (PRS).

The move follows a decision by the government to develop a rent freeze and ban on repossessions in the PRS without proper consultation with stakeholders.

View Full Article: Campaign launched to fight policies ‘damaging Scotland’s PRS’