State of the PRS - 2018, Quarter 4

Summary

The quarterly landlords’ survey undertaken in December 2018 and January 2019, published in February 2019, was open to both members of the RLA and the wider landlord community. Those who completed the survey on-line were asked their views on a series of topics. This survey focused on Finance & Investment. 

Over 2,400 responses were collected.

Portfolio decisions

Landlords expect to be more likely to adjust their portfolios in 2019 than they were in 2018. Few landlords are expecting to significantly expand their portfolio, even though most report demand as stable with void periods short.  

There is evidence to suggest those landlords who are pessimistic in their outlook of the Private Rented Sector are more pessimistic than those who are taking an optimistic point-of-view.

Changing rent levels

Only a minority of landlords are planning to increase rents in 2019. The decision to increase rents is intertwined with the relationship landlords have with their tenant: the value landlords place on having a “good” tenant will often outweigh the marginal financial gain from increasing rent levels. 

For those who are increasing rents, changes to Mortgage Interest Relief was a significant factor.

Energy performance

Most landlords know there is a need for their property to meet an EPC threshold and progress towards that threshold is a positive news story.  

It should be noted however that any attempt to raise the minimum EPC threshold, even with a long lead-in, would not be welcome: many landlords have funded energy efficiency improvements from current revenue streams and their own savings rather than through increasing rent levels.

Court processes

Though only a few landlords attempted to regain possession of property in 2018, there is widespread dissatisfaction with the court process and little confidence in the existing system. 

Section 21 remains the most used mechanism for landlords seeking to regain possession.

Landlords' motivations

Most landlords could be described as “lifestyle” oriented, with very few generating enough rental income for it to be their main profession/employment.

Instead the majority of landlords completing this survey view owning property as an alternative investment to a pension and/or as a second income source.