How The Housing Landscape Is Changing for Landlords in 2024, and What You Can Do to Prepare
It’s a tough time to be a property investor. Tax and legislation changes have already made the landscape infinitely more challenging which, combined with the current cost-of-living crisis and high interest rates, have created a perfect storm for landlords.
That’s not to mention further change on the horizon in the shape of the Government’s Renters (Reform) Bill, which may, or may not, have passed into law before a general election.
As we at the National Residential Landlords Association (NRLA) have taken pains to explain to THE Government, the changes brought in do not just hurt landlords, they hurt tenants too.
The most recent figures from property portal Rightmove show there are now 11 prospective tenants competing for each rental property.
This shortfall between supply and demand is forcing rents up across the country, making life even more difficult for those on the lowest incomes who are looking to the sector for a home, compounded by years of woeful underinvestment in social housing.
We are in the midst of a national rental housing crisis, and we need to take action now to give private landlords the confidence to remain in the sector and to continue to invest in the homes to rent that this country so desperately needs.
The NRLA is committed to bringing about positive change for landlords – and tenants – and has already seen significant successes; with changes to the Government’s rental reform plans, and energy efficiency proposals introduced as a direct result of our campaign’s work.
Who Are We?
The NRLA is the UK's largest membership organisation for private residential landlords, supporting and representing well over 100,000 members who provide three-quarters of a million homes in the private rented sector.
Created by landlords, for landlords, we are a not-for-profit association that offers landlords, and investors everything they need to run professional, successful and compliant lettings businesses.
This includes all the documents and guides they need, as well as unlimited access to our ever-popular landlord support line, available at the end of a phone, or click of a mouse answering landlord questions on every aspect of lettings.
We provide news and updates on legislation change; training and networking opportunities, as well as exclusive member benefits and savings.
We are also a recognised and respected voice in the media and the corridors of power in Westminster and Cardiff Bay.
Changing The Perception of Landlords
While rents are at record highs, landlords’ profits are at a 16-year low, dropping below 4% last year, proof landlords are not increasing rents for profit.
Despite this, the industry is much maligned in the media which has become an increasingly hostile environment to landlords in recent years.
We are not naïve. We know there are rogue landlords out there and we are as committed as anyone else to rooting them out, which is why we have been campaigning for enhanced funding for increased enforcement at the local authority level.
Contrary to what you might hear in the press or broadcast media, what is needed is not more legislation and red tape, but properly funded, targeted enforcement to identify and prosecute those who believe themselves above the law.
We are tackling ending anti-landlord rhetoric head-on, with evidence-based arguments proving landlords are not the enemy.
NRLA-commissioned research shows landlords are far from the fat cat’s journalists and some politicians would have them to be, with the vast majority – 69% – basic rate taxpayers.
Our media work is gaining traction, with 5,000 media mentions in the press last year – getting landlords’ voices’ out there and bolstering our campaign for change.
Pro-landlord Means Pro-tenant
I don’t buy the argument that to give renters a better deal you have to target landlords, and pitting them against each other helps no one.
Pro-landlord policies do not hurt tenants, they help them – and could even help the Government too, with recent research from consultancy Capital Economics suggesting that scrapping George Osborne’s Stamp Duty levy on additional properties could, in fact, boost Government coffers to the tune of £10 billion.
At the same time, it would make investments more affordable for landlords, increasing the supply of homes to let, which in turn would make renting more affordable to tenants – surely a win/win?
Changes to mortgage interest relief – again a George Osborne policy – have also crippled those landlords with borrowing, and the NRLA continues to campaign for the reversal of the unfair tax change to help landlords help tenants.
What Does 2024 Hold?
Rental reform is the big story for 2024, although what exactly this will look like depends on a number of factors, not least timescales and the upcoming general election, currently expected to be held in Autumn.
Change is coming whichever party triumphs at the polls, but the NRLA has been campaigning tirelessly for sensible, workable amendments to the current proposals that will mean landlords can continue to run their businesses with confidence while allowing the Government to honour its commitment to renters.
Section 21 – the so-called ‘no fault’ eviction is going. The Conservatives have been clear on that from the start of the process – and we know that Labour, too, is committed to its abolition.
Our role, therefore, is to ensure that whatever replaces it is fit for purpose and – most importantly – protects landlords’ rights to take back possession of their properties in legitimate circumstances.
I was particularly pleased that the Government accepted our recommendation to strengthen the grounds around antisocial behaviour and rent arrears.
Housing Secretary Michael Gove’s announcement that Section 21 will only go AFTER courts have been reformed to cope with the inevitable increase in demand was music to my ears and comes after sustained NRLA campaigning on the issue.
There is already a substantial backlog in the courts, not least as a legacy of the COVID-19 pandemic, but swift access to justice – be that as a landlord or a tenant – is a non-negotiable as far as I am concerned.
We are dealing with people’s lives and livelihoods, and the Government cannot afford to get it wrong, something I have explained to Mr Gove at private meetings and at the NRLA’s annual conference, where the Housing Secretary was the keynote speaker, addressing the landlord audience and answering member questions.
It is through this strong working relationship with Government that we have managed to bring about other positive changes.
The association has secured a commitment from the Government, that will allow landlords of student HMOs to continue to operate in line with the cycle of the academic year.
Fixed-term tenancies are being scrapped as part of the reform plans; however, Ministers put forward a possession ground for student landlords after the NRLA and other stakeholders pointed out that the change would make it impossible for them to make their business models work – something that could have had a catastrophic impact on the supply of student homes.
We are now campaigning for the extension of the ground to one and two-bedroom student properties.
We are also focussing our efforts on calls for a moratorium on evictions – challenging proposals within the Bill that would allow tenants to serve two months’ notice at any time.
The NRLA wants a moratorium period at the start of a tenancy, during which a tenant cannot serve notice.
This would provide landlords with a degree of confidence that a six-month tenancy term would be a minimum (a four-month moratorium, plus two months’ notice), with an amendment to this effect recently tabled by Conservative MP, Anthony Mangnall.
The NRLA has long opposed landlord licensing as a money-making exercise, with little correlation between the introduction of licensing schemes and improved standards.
We believe that the introduction of the Government’s new Property Portal will render licensing schemes obsolete, and I was delighted that Michael Gove seems to agree – telling me I made a ‘good point’ when I made this argument at a recent event.
NRLA Successes
The NRLA has also secured other notable successes through our campaign work over the last 12 months and beyond.
Last year Rishi Sunak announced, following lobbying by the association, that proposals that would force landlords to spend up to £10,000 per property on energy efficiency improvements were being scrapped.
This is not to say that we don’t believe in energy-efficient homes, far from it, just that the policy was ill-conceived and prohibitively expensive – not least for landlords in less affluent areas where properties command lower rents.
Working with other pressure groups, we also secured a Government U-turn on the issue of disaggregation, which had seen HMO properties reclassified as individual units, in some cases adding thousands to landlords’ tax bills.
And in a move which will benefit not only landlords but some of the most vulnerable tenants across England and Wales, we successfully campaigned for the reversal of the unfair freeze on Local Housing Allowance rates, used to calculate housing benefit payments.
Rates had been frozen in real terms in 2020, with payments based on rents that changed in September 2019, despite real-world rents going up by more than 10% since then.
Is Property Still a Good Investment?
This is the $64,000 question, and one that really depends, largely, on a landlord’s individual circumstances.
From my point of view, it is an absolute yes, yet there is no mistaking that property isn’t as lucrative as it was 20 years ago, and there are now significant challenges, especially for landlords with mortgages.
However – as the figures show – there is significant demand for rental property, and that demand shows no signs of abating, with the Government way behind on housebuilding targets for the social sector.
And it isn’t just about rental income. Investing in property means you have a tangible asset, that is likely to rise in value if you take care of it and are investing in the medium to long term.
However, you should always make sure you are doing your due diligence before making any purchases.
Work out what you can afford – including in a worst-case scenario where interest rates are concerned – do your tax calculations and think about how you structure your business.
The key to success is to know your market. Analyse the demographic of that area, ask yourself what the transport links are like, for example, schools, employment prospects and what are the long-term plans for the area in which you want to invest?
Remember it’s always worth seeking professional advice to ensure that you invest in the most tax-efficient way – investing blind is a sure-fire way to lose money.
What About Short-Term Lets?
With the legislative landscape of the PRS increasingly difficult to navigate, many landlords have moved into short-term lets, be that serviced accommodation on short contracts, or the Airbnb model.
However, the exodus of landlords from the PRS has had a serious impact on the availability of homes to let, particularly in cities and holiday destinations, infuriating many local people in popular destinations.
A number of local authorities are now making use of discretionary powers to charge owners of second homes or holiday homes a premium of up to 300% on their council tax bills, with the threat of further restrictions also on the cards.
In London homeowners who let their homes – or part of them – on a short-term basis are restricted to letting out property for a maximum of 90 nights a year to protect the rental market. Anything above that requires planning permission.
Recently there have been calls for a number of organisations to extend restrictions to other parts of the country, with the Government committing to introducing a registration scheme and consulting on measures that will give councils greater control over the number of short-term lets in their area.
While further detail is needed this could have a significant impact on landlords who have changed their business model to go down this route and something you should consider if you are thinking of following suit.
What Does the Future Hold for the PRS?
Government hopes have been pinned on build-to-rent investors as the saviour of the PRS, but while some of the demand for new rental properties will be met through build-to-rent schemes, this remains a small portion of the market.
Individual landlords are still the largest providers of private rental accommodation by some distance, and I genuinely believe the future of the property market lies within the hands of small-scale landlords.
Large-scale projects work well on paper, but by the time they’ve gone through the planning process and been built years have passed. Speed is what the UK needs right now.
Small-scale investors can move much more quickly and buy properties at a faster rate, bringing safe, secure and sustainable homes to the private rented sector.
What the Government needs to do is to act now to support these smaller landlords.
These people are the backbone of the PRS, and vital if we are to develop a vibrant and robust private rented sector of which we can all be proud, and it’s time they got the recognition they deserve.
More Information
Joining the NRLA starts from £99 per year, with an array of exclusive member benefits, including access to our dedicated member support service, which answered more than 101,000 calls from members last year.
Campaigning for change is a key pillar of our work and we would encourage all landlords who want to raise issues affecting themselves and their businesses – whether members or not – to contact their MP to outline the impact changes are having on a local level.
The NRLA is committed to getting your voices heard where it counts. To find out the very latest about our campaigns work, legislative change, news, events and member offers, visit our website at: www. NRLA.org.uk and follow us on social media:
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