Death of amateur landlord to wipe £224bn from PRS value
Death of the amateur landlord could wipe £224bn from PRS value
The latest market analysis by specialist property lending experts, Octane Capital, suggest that should a consistent string of legislative changes succeed in eradicating the amateur landlord, it could reduce PRS market stock levels by 383,600, wiping £223.5bn from the value of the PRS market in the process.
Across the UK, the Private Rented Sector (PRS) currently accounts for 18.8% of all dwellings, which equates to around 5.6m homes.
It is estimated that these properties are owned by 2.74m landlords, with each landlord owning an average of just over two properties.
However, this number could be on the brink of a significant decline as, rather than addressing the housing crisis head on, the government has introduced a string of legislative changes designed to deter buy-to-let investment, by reducing landlord profit margins – a move that has seen the amateur landlord hit hardest.
It is estimated that 14% of the UK’s buy-to-let landlords are ‘amateur landlords, owning just one rental property. This equates to some 383,600 landlords across the nation, and therefore, the same number of privately rented homes.
The question is, what impact will it have on the rental market if the government gets its wish and the amateur landlord falls into extinction?
First and foremost, it would mean the PRS loses 383,600 of the 2.74m homes currently available across the sector, which would result in a -14% stock reduction.
With the estimated average price for a buy-to-let property currently standing at £285,915, losing this many homes would reduce the PRS’s market value by £223.5bn in one fell swoop.
CEO of Octane Capital, Jonathan Samuels, commented:
“In recent years, the UK government has looked to eradicate the amateur landlord via a string of legislative changes, designed to dent profit margins in order to help address the shortage of stock within the sales market.
Firstly, this is not a practical or reasonable solution when really the answer is to build more homes.
Secondly, in doing so, it’s the nation’s tenants who are paying the price, with a shortage in stock only driving the cost of renting ever higher.
Should amateur landlords cease to exist, it would further reduce PRS stock levels by a significant amount and only exacerbate the problem further.”
