State of the PRS – 2019, Quarter 3

State of the PRS – 2019, Quarter 3

The RLA’s State of the PRS research helps the RLA to develop essential insights into the issues affecting the Private Rented Sector (PRS).

Over 2,000 landlords, letting agents and asssociated professionals with an interest in the sector gave up their time to complete our survey. Our thanks go to them.

Note that the RLA no also produces a Landlord Confidence Index (LCI) with the data which informs the index provided via these quartely surveys. The LCI which was produced from this survey can be found here. 

Landlord Confidence

The LCI has more analysis on landlord confidence (see above for a link).

Void periods (here defined as the length of time a property remains vacant between tenancies) continues to be short.

BUT overall confidence remains low: fewer than 5% of landlords are now more confident than they were in the previous quarter. A fall in confidence has been particularly noticable in London.

The long-term upward trend in the proportion of landlords reporting they will sell property is continuing.

Subsequent analysis in this report shows up to 30% of landlords are seeking to exit the sector in the next five years.

Landlords and finance

Many landlords, though they may have expanded their business, often let property with modest aims and ambitions.

A proportion of landlords may have businesses which are susceptible to shocks from sudden policy changes or interest rate rises.

Landlords and Tax Issues

Rather than any one tax change, landlords told us it has been the cumulative effect of changes across the tax spectrum which has lowered confidence.

Furthermore, many landlords who participated in this survey stated they would abe more likely to invest in construction and conversion projects were the tax structure they face different.

The current tax regime is stifling investment and reducing consumer choice in the PRS.

Energy efficiency

Landlords have a track record of investing in energy efficient measures.  Almost two-thirds of landlords let property which meets current EPC targets set out in the government’s Clean Growth Strategy.

The survey finds that intervention by means of tax or grant based support could bring investment plans forward.

Potential PRS initiatives

The survey identifies (i) reversal of the phase-out of Mortgage Interest Relief (MIR) and (ii) CGT reductions as the policy changes landlords would most like to see.

Several tax reforms were put to landlords in the survey. Their responses indicated they favoured policies which could unlock investment in the PRS and encourage property sales to tenants in situ.

Nick Clay

Nick Clay MSc, PgDip is the lead Research Officer for the NRLA, having previously worked for the Residential Landlords Association (RLA). Before joining the RLA Nick had a successful career working for various consultancy companies, Whitehall and academia. He has specialised in advising clients on business support, promoting entrepreneurship and evaluating labour market initiatives. Nick worked as a Senior Economist for a large multi-national consultancy advising Whitehall and City Regions on major infrastructure projects.