Over the last two years, the number of homes available to rent throughout the UK has grown at a substantial rate, from 154,000 in 2015 to more than 170,000 in 2017.
Despite this, the total number of landlords in the UK has decreased, with fewer owners renting out properties than before. The reason? The rise of the “professional landlord”, and a decrease in the number of “part-timers” renting out properties as a side venture.
There are several reasons for the reduction in the number of landlords operating in the UK over the last few years. One is the slowed growth rate of house prices — many recent landlords took up property letting as a side investment, largely due to rapidly increasing home prices.
This meant that throughout the early 2000s (during which the price of the average UK property almost doubled), landlords were numerous. Today, with house prices falling in many parts of the country, including London, many part-time landlords have gotten out of the business.
Others have sold on their properties, often to professional landlords, in order to take advantage of the large-scale rise in housing prices over the past decade.
Another potential cause for the decline in the total number of landlords is the increasing rate of regulation in the industry. Tax-related changes, new regulations and other changes to the real estate letting industry have changed the market, often in favour of professional landlords.
While it’s not the best outcome for part-time landlords — property owners interested in earning rental income from an investment property — the concentration of more rental properties in the hands of fewer landlords has been a major win for specialist brokers.
Unlike part-time landlords, who typically purchase property in their own names, professional landlords are more likely to buy investment properties through limited companies, creating a range of tax advantages and efficiencies.
For specialist brokers accustomed to working with mid-size and large-scale landlords, this is a significant professional advantage. With a greater focus on buying properties through limited companies comes a greater need for detailed, accurate professional advice.
There’s also a great opportunity for brokers that specialize in lending to buy-to-let buyers, who are likely to make up an increasing number of mortgages over the coming decade. With fewer customers, there’s a great opportunity for brokers to focus specifically on high-value buyers.
It’s also a potential win for tenants. With fewer landlords viewing their rental properties as side projects, the quality of rental properties available is likely to increase, as professional landlords tend to view their homes as core business assets.
This means that amenities and services that are often lacking from many rental properties — from proper end of tenancy cleaning to insulation, heating and general maintenance — could reach a higher standard over the coming years.
The property market is always changing, both for brokers, landlords and tenants. The current trend towards an increase in the number of professional landlords is a boon for all, creating a range of business opportunities for brokers and higher quality properties for tenants.
