Government intervention in the private rented sector (PRS) will result in rising rents as landlords are forced to pass on the burden of greater regulation or seek higher returns, a trade association warns.
In its latest report, Vital role of the Private Rented Sector, the Intermediary Mortgage Lenders Association (IMLA) examines the changing nature of government intervention in housing, prospective changes in regulation such as the Renters’ Rights Bill and potential future energy performance requirements for privately rented homes.
The trade body lays out a series of recommendations for a more effective policy framework for the sector.
The PRS is subject to over 100 regulations, most introduced since 2004. More are set to arrive, laid out in the proposed Renters’ Rights Bill.
The IMLA wants the government to recognise that the consequence of increased regulatory costs for landlords is higher rents. Furthermore, policy changes that increase the risk to buy-to-let (BTL) owners, such as the introduction of rent controls, will cause them to seek higher returns, which in turn leads to higher rental costs for tenants.
Among its recommendations, the trade body also wants the government to give greater recognition to the sector, which provides homes for just under 20% of UK households. A one-size-fits-all approach causes anomalies and unfairness, particularly towards smaller landlords, who, according to the IMLA, account for 80% of all BTL owners who own 61% of the privately rented stock.
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Unintended consequences
Kate Davies (pictured), executive director of the IMLA, said: “The government’s long-term plan to massively boost much-needed social rented accommodation is very much welcomed, but cannot come at the expense of the UK’s private landlords.
“IMLA is reiterating a call we have been making for some time: for policymakers to take action to ensure those landlords feel confident enough to remain in the sector and continue to offer this essential housing for the country’s renting population.
“Continuing to heap expensive regulation on the sector risks pushing out more of the smaller landlords who make up the lion’s share of providers, creating a vicious circle of fewer rental properties available and higher rents for tenants.”
