Owners cite retirement planning and investing as top reasons for joining the industry

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Most English homeowners entered the sector because they saw it as a solid investment or to supplement their pensions after years of strong house price growth, but activity in the sector is toughening according to the English Private Landlord Survey (EPLS).

The government’s EPLS for 2020/21 revealed that 42% of the 9,000 owners surveyed entered the market because they saw property as a solid investment, while 40% saw it as part of their financial planning for retirement to supplement their pension.

More than a third, 35%, became owners after buying their first property with the intention of living there themselves.

Buy-to-let landlords were more likely to view their role as a landlord as a long-term retirement investment with 58% saying so, compared to those with other types of loans or those without debt. loan at 44% and 51% percent respectively. Additionally, 7% of rental owners consider it a business, compared to 3% of those with other types of loans and 2% who have no loans.

Some 34% of rental landlords said they saw their role as an investment in capital growth, compared with a quarter for those who borrow other types of loans and 19% for those without debt. loan.

However, the investment is not without risk, according to Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown.

She said older investors shouldn’t rely too heavily on homeownership as a retirement plan in the event of a market downturn, and that being a homeowner is plagued with costs and legal stressors, especially when it’s it’s about selling.

“It could be particularly difficult if you had to sell quickly to finance long-term care for example,” she added.

Landlords can also end up with stamp duties, legal fees, and ongoing maintenance costs that accumulate over time, increasing exponentially the more properties a landlord owns. The rent is also taxed, as are the profits in the event of a sale.

Morrissey added: “If you’re thinking of being a landlord until you retire, then you’ll have to consider the work that being a landlord entails and if you’re not able to do that, you’ll have to pay someone who can. It is important to have a long-term vision of these costs when deciding to take the leap into becoming an owner.

Increasing privatization

The number of households in the private rental sector increased by 45% between 2008/09 and 2020/21, from 3.1 million to 4.4 million households. It is now the second largest occupancy in England, comprising 19% of all households, having increased by 5% since 2008/09, when it was smaller than the social rental sector.

Owners with buy-to-let mortgages were more likely to have multiple properties than those with other types of loans, or no loans at all. One in three, 33%, of owners with a rental mortgage owned one property, with the remaining two-thirds, 67%, owning two or more.

The use of alternative loans is also growing. Almost two-thirds, 62%, of owners with non-BTL loans owned a property, up 11% from 2018.

More than a third, 43%, of owners own a rental property, representing 20% ​​of rentals, while 18% own five or more, representing 48% of rentals.

The gender gap shows that 44% of owners are women. Women are also more likely to own a single property, 55%, while male owners tend to have larger portfolios.

Tenant stress and rent

The survey revealed that things can get tricky when it comes to dealing with tenants, who have an increasingly high turnover for private landlords.

There are approximately 3.9 million live deposits registered with government-backed Rental Deposit Protection (TDP) schemes in England. Of approximately 438,000 registrants comprising owners and agents, approximately 408,000 were owners who registered the deposits themselves. However, only 62% returned the entire deposit at the end of their last rental.

Owners of a single property most often had a tenant in arrears, at 67%. As a result of the pandemic, 18% of landlords negotiated a new arrangement, of which 49% reduced rent and 31% entered into a deferral agreement.

Evictions get tougher

The government has announced plans to reform the private rental sector, including the abolition of ‘no-fault’ evictions under Section 21 of the Housing and Planning Act.

While 67% of evictions last year were no-fault evictions, one in four landlords had to issue a section eight notice for breach of tenancy terms. One in 20 offered to pay tenants to leave.

Families are also increasingly likely to rent, with 1.3 million families, or 30%, including dependent children in 2020/21.

Nearly half of landlords, 45%, have raised the rent for new rentals. Only 35% kept the rent at the same level and only 8% lowered the rent. For renewals of existing leases, 64% of landlords kept the same rent, 26% increased it and 4% decreased the rent upon renewal.

The vast majority, 84%, were unwilling to rent from someone with a history of rent arrears. Meanwhile, more than two-fifths of landlords, 44%, were unwilling to rent to tenants either with housing assistance or universal credit.

Almost half were unwilling to rent to inclusive students, 48% renters with pets, 45% and 44% were unwilling to rent to tenants requiring property adaptations.


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