Landlords tell The i Paper increasing regulations could lead them to selling up in the UK and investing in properties abroad
Rent controls could drive landlords out of the UK as they feel the market is becoming “too restrictive” and “unprofitable”, they have warned.
The Renters’ Rights Bill (RRB), although not yet finalised, is expected to pass into law by the summer of 2025.
Intended to give tenants greater protection, it spells the end of Assured Shorthold Tenancies – the most common type of agreement if you rent to private individuals.
Instead, tenancies will run from month to month until either the tenant serves notice, or the landlord meets one of the grounds for regaining possession of the property.
But landlords have told The i Paper that increasing regulations could lead them to selling up in the UK and investing in properties abroad.
‘The Government needs to stop treating landlords as the enemy’
Anu Verma, 44, owns five rental properties. She bought her first one in 2007 when prices were more reasonable, and she said she’d like to keep investing here.
But the reforms have made her “hesitant” and she is considering “venturing to the EU where the weather and lifestyle is better and living costs are cheaper”.
Verma, who lives in Coventry, said: “The biggest concern for me is flexibility.
“Tenants do need security, but there are times when landlords genuinely need to reclaim a property, for example, if they are selling up or moving in themselves. The legal and financial hoops to jump through are getting ridiculous.
“I’ve thought about selling, but the hassle of selling a rental property with tenants in situ is a nightmare, never mind the capital gains tax we’ll get stung with.
“Add that with the low market value of properties where they are at now and I’ll be losing money.
“I have been considering investing abroad and am already in contact with Portuguese agents and brokers.
“I did lose a lot of money back in 2009 when I invested in Dubai and the recession hit, so I am very cautious with overseas investments due to that experience.”
Verma is not alone in her feelings as new research from Aldermore Bank has revealed that one in three landlords are considering selling up due to economic and regulatory challenges.
The main motivating factor driving landlords to potentially divest are high maintenance costs associated with their rental properties, and increased regulation of the sector such as the RRB.
Verma, who works full-time as a trauma expert, added: “Stronger protections are great in theory, but the reality is that the more risk you pile on to landlords, the fewer will stay in the market.
“A fair rental market isn’t just about tenants, it has to work for landlords too, or there won’t be enough homes to rent so we’ll end up in a property rental crisis.
“The Government needs to stop treating landlords as the enemy. Most of us are just trying to provide housing while covering our costs.
“A balanced approach would include incentives for landlords to stay in the market, things like fairer tax treatment and support for making properties more energy efficient, not being brutalised like we already are – it’s not fair.”
‘Increased regulation, higher taxes and rising costs make the UK less attractive to stay in’
Although Paul Nicholson, chief executive of the Nicholson Group property company, finds himself in a more comfortable position than Verma, he is concerned about the impact the RRB will have on landlords across the country more generally.
The 40-year-old has a portfolio approaching 300 properties in the Liverpool area and he is “constantly looking to expand”.
But he said: “Increasing costs and regulations are squeezing landlords’ profit margins.
“Higher taxes, such as the reduction of mortgage interest relief and increased capital gains tax, eat into earnings.
“And on the subject of rent controls, if introduced, they could limit the ability to adjust rents in line with inflation and maintenance costs.”
Nicholson agrees that the upcoming changes would lead to more small landlords selling up in the UK and looking abroad.
He said: “If landlords are selling up or looking abroad, it’s perhaps because they feel the UK market is becoming too restrictive or unprofitable.
“The combination of increased regulation, higher taxes, and rising costs (like mortgage rates and energy efficiency requirements) can make it less attractive to stay in.
“But this is more the predicament of the small landlord who’s trying to consolidate their portfolio.
“Any professional portfolio landlords alongside large corporate landlords have everything in place in terms of regulation and the ability to absorb costs.”
The implementation of the new legislation for new and existing tenancies is set to take place on the same day and currently does not allow for any phasing in or out.
It is understood that there will be an adjustment period before the legislation is enforced to allow landlords and agents time to prepare for the new tenancy rules.
Another change landlords need to prepare for is the abolition of Section 21 notices – also known as no-fault evictions.
Landlords will instead have to use a section eight notice, citing one of the specific grounds for possession.
These include if the landlord, or their family, wants to move into the property, or they want to sell it, among other reasons such as rental arrears and antisocial behaviour.
Nicholson added: “Banning no-fault evictions gives tenants more security and who wouldn’t want long-term renting stability?
“Of course, it will be tougher for landlords to regain possession of their properties unless they can prove a valid reason under section eight – which can be a longer and more expensive process.
“I’d like to think that the new dispute resolution measures offer a common-sense approach reducing costly court battles, there just needs to balance rather than the odds ruling heavily in favour of one-side.
“Large portfolio landlords are renting those properties for consistent income. The smaller landlords might take stock of where they are at alongside those sat on their assets, both will be very concerned.”
