Allison Thompson, the lettings head at LRG, is championing the need for a ‘Landlords Reform Bill’. Throughout 2023, LRG has been vocal in highlighting landlords’ crucial role in preventing homelessness. The strain on landlords has reached a point where it risks serious repercussions for both the housing sector and its beneficiaries.
The rise of the amateur or small-scale landlord dates back to the 1990s, catalyzed by the scarcity of council houses and fueled by the Right to Buy policy. These individuals played a key role in supplementing the private rented sector, thus addressing significant housing challenges.
However, the landscape for landlords has been altered by regulatory changes and modifications in mortgage relief. Such shifts have pressured some landlords to consider selling their properties, inadvertently impacting the private sector’s ability to provide housing solutions.
The increasing homelessness rates, highlighted by initiatives like Prince William’s Homewards, could escalate if more landlords withdraw from the market. The devastating effects of homelessness on individuals, families, and the stretched resources of local authorities and charities underscore the urgency of the situation.
A recent survey by Leaders Romans Group revealed landlords’ demand for a comprehensive Landlords Reform Bill. This legislation would acknowledge their pivotal role in combating homelessness and offer necessary protections to motivate their continued involvement in the rental market.
Proposed elements of this Bill include establishing dedicated housing courts for expedited legal proceedings, repealing Section 24, and increasing social housing stock. Particularly critical is the repeal of Section 24, which currently restricts landlords from deducting most finance costs, including mortgage interest, from their rental income for tax purposes. This has escalated costs, consequently driving up rents and contributing to homelessness and hardship.
Despite over 29,000 landlords petitioning the government to reverse Section 24, the response has been to maintain the current system of only allowing mortgage interest relief at the basic rate of tax. With rising costs in property finance, energy, and building materials, a change in this area is deemed essential.
Looking forward, the private rented sector is expected to continue its professionalization. This trend is evident in the growing number of portfolio landlords, with 18% now owning half of the rented homes in the private sector. This shift has been influenced by various factors, including the emerging Renters (Reform) Bill and increasing regulations.
Economic pressures have also driven landlords to become more financially savvy, leading to both structural and physical changes in their property portfolios, particularly in enhancing energy efficiency.
The changing landscape sees landlords with extensive portfolios becoming more common, a stark contrast to a few years ago. While there are concerns about some aspects of the Renters (Reform) Bill, the move towards higher standards is welcomed, and LRG remains committed to assisting landlords in navigating these changes.