PropTech firms Goodlord and Vouch have released the findings of their annual State of the Lettings Industry survey.
Some 2,600 agents, landlords and tenants were questioned and the results confirm recent trends in the rental world.
The findings are split into various categories
1. White Paper causing concern amongst agents and landlords
The rental reform White Paper in June gave the industry a much clearer picture on what legislation to expect over the coming months and years. And the immediate feedback from the sector was far from positive.
Some 81 per cent of agents expressed concern about the impact the Renters' Reform Bill could have on the private rented sector. One third said they were "very concerned" and almost half of agents said they were "somewhat concerned".
Landlords felt even more strongly. With over half “very concerned" about the impact of the Bill on the private rented sector.
However, two-thirds of tenants agree that they would like to see more legislation introduced around renting in the UK.
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2. Section 21 remains contentious
Abolishing section 21 remains contentious, with 28 per cent of agents and 53 per cent of landlords expecting it to have a "major and negative impact" on the PRS. In contrast, 23 per cent of tenants said they thought it would have a "major and positive impact".
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3. Periodic tenancies and pets spark opposition
A full 40 per cent of agents expect the introduction of a single system of periodic tenancies to have a negative impact on the PRS. The same number expect the new rules on allowing 'pets in lets' to have a negative impact on the sector.
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4. Agents confident about legislation but landlords pessimistic
The vast majority of agents, however, remain bullish about their ability to handle the upcoming changes. Three quarters of agents said they were "very” or “somewhat” confident that their businesses were set up to cope with future legislation changes.
In comparison, only 22 per cent of landlords said they were "very confident" that they were set up to cope with future legislation changes.
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5. Rental arrears drop year on year, but predicted to rise
In brighter news, fewer agents have seen increases in rent arrears over the past year — only a quarter said they've seen increases in arrears across their portfolios. This compares to third of all agents this time last year.
However, of those agents who had seen arrears increase, almost half said that arrears in their portfolio had increased by more than 20 per cent, indicating the intense financial pressures faced by certain households.
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6. Landlords and agents concerned for tenant finances
This reflects a broader concern from agents around the impact the cost of living crisis is set to have on the market during the year ahead. Some 80 per cent of agents say they are "very" or “somewhat” concerned about the impact of an economic recession on the private rented sector.
And 46 per cent of landlords believe the cost of living crisis will have a major negative impact on tenants. And the same number of tenants agree; 46 per cent are concerned the crisis could impact their ability to pay rent.
Just 15 per cent of tenants said they had already had to make other arrangements (such as a payment plan or borrowing from friends or family) so that they would not miss rent payments. And a fifth of tenants said they had already moved as a result of the cost of living crisis. A further one in 10 said they were considering moving for the same reason.
7. Lack of stock intensifies as landlord losses mount
In 2021, low stock was the leading cause of concern for agents. And it appears that the last twelve months have done little to ease the pressure.
Almost two-thirds of agents said they had struggled with a lack of stock in the past year. More than a quarter of agents had seen more than 10 per cent of their landlords leave the sector in the past year. And two thirds said they expected even more of their landlords to leave in the coming year.
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8. Legislation pushing landlords away
No fewer than 63 per cent of landlords said they had considered leaving the private rented sector. Almost three-quarters of landlords said that legislation and regulation changes would be one of the top three reasons that would cause them to leave.
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9. Optimism declines, but pessimism still in the minority
There’s been a big drop in optimism amongst agents. Less than half of agents say they're either "very optimistic" or "somewhat optimistic" about the future of the lettings industry. This compares to 67 per cent of respondents in 2021 and 80 per cent in September 2020 (at which point the UK was emerging from all initial lockdown restrictions).
However, only a quarter of agents say they're pessimistic about the future of the lettings industry.
Letting agents are also feeling stressed out in the current climate, with 87 per cent of respondents agreeing to some extent that "most days, I feel stressed in my job". A full 90 per cent said that their workload had increased in 2022.
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I know of one landlord who has ten excellent houses that he has let for many years, who selling up next year. That will be ten homes no longer available to rent.
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