As this is the final Buy-to-Let Watch of 2023 — and after a particularly challenging year for so many people in our wonderful sphere — it seems appropriate to highlight how important a role the private rental sector (PRS) plays in underpinning a healthy and balanced society.
It’s an unpopular opinion but landlords are superheroes — often unsung — acting as an ethical indemnity to the government’s woeful lack of social housing, and as a modern-day Soter to society’s most vulnerable, where shelter and housing, let alone homeownership, can often be so unfairly difficult to secure.
Landlords invest in an area that ‘gives something back’
We are acutely aware of the affordability issues that continue to affect so many within the PRS. As a specialist brokerage, essentially our business is built on supporting landlords. However, we have a significant vested interest, and a relentless, ethically driven desire, to ensure that the UK has a fit-for-purpose PRS, enabling wealth distribution and equal opportunities through generations, regardless of class or privilege.
The structural inefficiencies of the housing market, and the stress fractures within the PRS, are abundantly apparent. Aside from the well-publicised cost-of-living crisis, most tenants have seen rents increase substantially over the past couple of years, with rises of 20% to 30% commonplace.
Once compounded with energy cost increases over the same period and wider inflationary pressures, this has effectively immured many tenants, with renting moving from being a lifestyle choice or a stepping stone towards homeownership, slowly evolving into a situation with no escape.
The most vulnerable within society need a working, healthy PRS as much as the government and our future generations do
Accumulation of wealth/savings is an impossibility for large numbers of renters as families struggle just to ‘keep the wolf from the door’, so to speak.
And that’s just the lucky ones who have the privilege of available housing, under any guise.
Media narrative
However, one of the privileges my role provides is to offer a rather perspicacious view of all sides.
I grow increasingly frustrated at the frequent — and lazy — media narrative of the opportunistic landlord increasing rents to offset their rise in finance costs. In fact, rent increases have been dictated by demand, and crucially by the lack of supply as many smaller landlords, who don’t have their assets structured within a tax-efficient set-up, continue to exit the market.
As a specialist brokerage, essentially our business is built on supporting landlords
One industry article reported that, on average across the UK, there are 26 applicants per available rental property. In any market, such a demand-and-supply ratio will aggressively drive an increase in prices.
Another article focused on the housing crisis in Liverpool, albeit the article reflected the contemporaneous challenges faced by local authorities around the UK. Due to a lack of social housing, Liverpool’s council had spent £17.24m on temporary accommodation in the past year alone.
Alarmingly, this was double the spend of the previous year, highlighting how the past 12 months have exacerbated a problem already at the precipice of a crisis. The homeless figure in Liverpool has risen by 47% in the same period, increasing by an almost incomprehensible 15% in September alone.
Accumulation of wealth/savings is an impossibility for large numbers of renters as families struggle just to ‘keep the wolf from the door’
The numbers are as tragic as they are mind boggling. This is only one council, in one city, and there are many councils spending similar amounts, and more, amid a pandemic of poverty ripping through the UK.
Yet, despite councils being at a financial deficit, and with no solution to even stabilise the problem (let alone reverse it), rather than be championed by media or laymen, landlords continue to battle against the tide of compounded regulatory and governmental obstacles placed in their way over recent years.
Despite these challenges, landlords personally generate significant capital growth and yield through their investments. However, whereas many investors invest in stocks, currencies or fine art, or shelter capital in hedge funds, etcetera, landlords should at the very least be applauded and recognised for investing in an area of choice that not only is less passive but also ‘gives something back’ to society in respect of wealth and taxes, and as chief supplier of stock to the rented sector.
Landlords act as an ethical indemnity to the government’s woeful lack of social housing, and as a modern-day Soter to society’s most vulnerable
The modern landlord’s contribution towards the wider economy, and the preservation of the social housing status quo, is vital.
Even though the PRS houses much wealth, and such increases in living costs can be swallowed by some, it must be acknowledged that the PRS also houses the most vulnerable within society, and those families need a working, healthy PRS as much as the government and our future generations do.
Matthew Rowne is director of The Buy to Let Broker
This article featured in the December 2023/January 2024 edition of MS.
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