A lettings agency leader is challenging the prevailing notion that a significant number of landlords are exiting the market due to rising costs associated with buy-to-let investments and increasing regulatory burdens. Allison Thompson, the national lettings managing director at the Leaders Romans Group, argues that the situation is more nuanced than the narrative suggests.
Thompson acknowledges that while some landlords have indeed chosen to leave the industry, the reality is that many properties are being sold because their owners have reached the end of their planned investment journey. This often coincides with a point in life when these landlords are considering retirement and seeking to capitalise on their investments.Â
Many of these landlords, who are often in their retirement years, have seen considerable profits from their property investments over the years. As a result, they are inclined to realise their equity gains, converting their rental properties into cash for other pursuits, whether that be retirement, travel, or simply diversifying their investments.
Interestingly, Thompson notes that these properties are frequently purchased by other landlords, many of whom are professionals intent on expanding their portfolios. This trend illustrates that the demand for rental properties remains robust, even as some landlords decide to exit the market.
In fact, according to Thompson, the proportion of households renting in the private rental sector has remained steady over the last decade. This stability indicates that while some landlords may leave, there are many others ready to step in, ensuring that the rental market continues to thrive despite the challenges and changes in the sector.
Thompson – who in the past has expressed support for various Conservative and Labour reforms of the sector – cites Rightmove data showing that across Britain some 18% of properties now for sale were previously on the rental market, compared with 8% in 2010.
She returns to her support for reforms when she says in a new statement released this week: “Although much has been made in the media of the ‘danger’ to landlords of Section 21 being scrapped and other planned rental reform changes making it more complex and more expensive to be in the buy-to-let business, good landlords have little to fear, especially if they are working with a qualified agent.
Thompson explains that, in reality, most of the time it is tenants who choose to give notice rather than landlords. She believes that a more regulated rental sector with higher standards benefits everyone involved. With the demand for rental accommodation continuing to rise and social housing developments not meeting targets, the role of private landlords remains crucial to filling this gap in the housing market.
She also stresses that despite the concerns surrounding new regulations, private landlords who take the time to thoroughly research the local market and make informed purchasing decisions can still see substantial returns. Ensuring properties are let and managed properly is key to success, and many landlords are still able to generate incomes that exceed other types of financial investments.
Thompson is clear in her support for the ongoing involvement of private landlords, particularly as the need for rental properties grows. She remains optimistic that with the right approach, landlords can not only navigate the changing regulatory landscape but also continue to thrive in the long term.
Thompson highlights that rents are increasing at a rate higher than inflation, which could help make buy-to-let investments more financially sustainable. She points out that property prices are also steadily rising, meaning landlords can expect their equity to grow over time.Â
However, she advises that property markets tend to cycle through ups and downs, and the best returns are likely to come from a medium to long-term investment strategy, typically around 15 years or longer. Being patient and committed for the long haul is key to maximising financial benefits in the buy-to-let market.