The long-anticipated Renters (Reform) Bill was finally introduced to parliament on the 17th May 2023, but many industry experts are warning that the changes announced in the bill could put increasing pressure on landlords to up and sell.
Given the current state of the housing market, with the demand for rental properties far outweighing the supply, there are legitimate concerns that landlords deciding to sell up could cause a housing crisis.
Why are landlords selling up?
The National Residential Landlords Association recently released data from BVA-BDRC who identified that the number of landlords in England and Wales considering selling their rental properties is at a record-level high, with 33% of private landlords planning to reduce their rental property portfolio and only 10% of landlords considering increasing their portfolio. These figures are quite surprising given that the demand for rental properties is also at an all-time high, with over 70% of landlords in England and Wales noticing an increase in demand. So what’s causing so many landlords to consider selling up?
Rising interest and mortgage rates shoulder some of the blame, but for many landlords in England, their biggest concern is the proposed Renters (Reform) Bill. Of the numerous measures outlined in the bill (including a new Ombudsman for settling disputes, tenants’ rights to request a pet, and the introduction of a new property portal – full details of the bill measures can be found here), many landlords are most concerned about the abolishment of Section 21 evictions and the consequences this will have on their right to reclaim their rental properties. This concern could potentially push landlords into selling their properties and exiting the market altogether.
Should we be concerned about a housing crisis?
It’s worth noting that there’s still a long way to go before the bill is approved – it’s only just starting its journey through parliament – but if it does become law then yes, we could potentially see the market worsen if landlords do indeed feel pushed into selling their properties. With the supply of rental properties already much lower than the demand, any dip in the pool of rental properties could consequently push rents up even further.
This risk isn’t a great outcome for anyone – landlords and tenants alike – so industry experts are calling on the government to use this reform to better support both landlords and tenants in a way that will help to sustain the market. The Royal Institution of Chartered Surveyors’ Senior Public Affairs Officer, Samuel Rees, issued a statement reiterating this:
“Demand for rental homes remains high, but stock remains low, and landlords are increasingly exiting the market – which is translating into higher rents.
“The government’s proposed changes…will increase pressure on landlords and may force even more to exit the market. The government needs to ensure that proposed reforms to the rental market are delivered in such a way that it increases support for landlords and tenants and maintains and grows supply.”
The National Residential Landlords Association’s Chief Executive, Ben Beadle, also commented:
“Responsible landlords need to be confident that when Section 21 ends, where they have a legitimate reason, they will be able to repossess their properties as quickly as possible. Without this assurance, the Bill will only exacerbate the rental housing supply crisis many tenants now face.”
It’s clear that there is a lot of uncertainty about what’s to come, but if you do decide to sell your property, it’s crucial to keep in mind that you’ll need to disclose and pay any CGT on your profit within 60 days. If you’re unsure about how to go about it, check out our Residential Property Sales: 60-Day Deadline for CGT blog or get in touch with us directly. We have a team of specialist accountants who are here to help. Contact us today using the form below!