A new approach to the English Private Landlord Survey (EPLS) provides a much more in-depth and nuanced exploration of private landlords.
So, what are the insights and what are my personal thoughts on their implications for policy?
The landlord population continues to be dominated by individuals, non-professionals and those with one or a small number of properties (94% individuals, 4% companies, 2% other organisations). Only 4% of individuals view their role as a full-time business, 14% a part time business. And only a quarter ever belonged to a rental property organisation. Although almost half (45%) own just one property, almost half (48%) of tenancies are with landlords owning five or more properties.
Most were approaching or in retirement – 59% of individual landlords 55 years or older, 29% of tenancies with landlords 65 or older with a third in retirement. Landlord debt is relatively modest with 39% of individuals having no debt and 55% a Buy to Let mortgage. And for those with debt, the average loan to value ratio was 50%, with just 18% having a ratio of 70% or more.
There was considerable support for longer term tenancies with 40% of landlords and agents willing to offer tenancies of more than 12 months and another 38% willing if there was a break clause to remove problem tenants. 42% did not offer longer tenancies due to concerns about problem tenants with 70% encouraged to do so if it became easier to remove problem tenants. When asked about compliance with legal requirements, agents and larger portfolio landlords were more likely to have carried them out with landlords much more likely to not know if they complied. Those with least compliance were landlords with just one property.
Although agents were more willing to let to all types of tenants, both landlords and agents were reluctant to let to households on benefits. The main reasons were perceived risk of delayed payment or unpaid rent (69%) and that benefits would not cover the rent (63%). Over a quarter of landlords, though just 9.7% of agents, were unwilling to let to non-UK passport holders.
Although most landlords (72%) used a mortgage to purchase their first property, more recent landlords were less likely to have used a mortgage. Those landlords with more than one property, were less likely to have used a mortgage to fund their most recent purchase than those to fund their first property. And in terms of future investment, more landlords planned to reduce the number of rental properties or leave the business than those planning to increase investment. 11% of landlords (16% of tenancies) planned to increase the number of rental properties compared to 15% (23% of tenancies) who planned to decrease the number of properties they owned.
The main reason for divesting was due to legislative changes (61%). Buy to Let landlords were more likely to be divesting and to do so due to legislative changes, with 74% of those reducing the number of properties and 63% of those selling all, Buy to Let landlords. Company landlords were slightly more likely to be planning to decrease or leave the business compared to individual landlords.
So, what are the implications for policy?
Reforms to introduce longer term tenancies that ensure landlords are able to remove problem tenants, are likely to be welcomed and potentially willingly adopted by the majority of landlords and agents.
Resistance to renting to people on benefits is likely to continue or worsen as welfare reforms and Universal Credit in particular, are rolled out. If landlords and agents received greater assurances benefits would be paid promptly and some of the most challenging aspects for landlords were addressed, this could slow or reduce their unwillingness to let.
It is unclear whether the introduction of the “Right to Rent” policy has encouraged landlord unwillingness to let to non-UK passport holders. This is particularly concerning given private renting is where almost all migrants seek to be housed. Lack of clarity following the UK withdrawal from the EU may also exacerbate the issue. Better information on landlord responsibilities and clarity around immigration rules targeted at landlords (as opposed to agents) may better raise compliance and a willingness to let.
Although the private rented sector has seen substantial growth, in the last five years it has remained stable and fell by 162,000 households in 2017/18. In addition to more landlords planning to divest than increase investment, a significant proportion of landlords are approaching or in retirement. Although the findings don’t include new landlords who might enter the sector, the findings suggest the supply of private rented housing is likely to remain sluggish or fall in coming years.
And changing investment is also likely to impact on the profile of landlords. The landlord population is likely to move away from multi-owning Buy to Let landlords and potentially away from company landlords. Although the growth of new single landlords is likely to slow, the large numbers of debt free single property landlords are likely to remain. So, a hollowing out of small to medium portfolio Buy to Let and company landlords. Although this changing profile might help achieve some concerns around financial stability (although debt levels were seen to be modest), it may be at the cost of compliance with legal requirements and efficiency as the profile becomes more concentrated in single property debt free individual landlords.
The EPLS 2018 has provided a much more nuanced and in-depth understanding of this diverse and multi-market and tenanted sector. The task now is to carefully digest these findings to inform a more nuanced and targeted approach towards policy interventions – for the benefit of landlords and tenants alike.
 English Housing Survey 2017-18 https://www.gov.uk/government/statistics/english-housing-survey-2017-to-2018-headline-report