This month represents something of the old and the new for the private rental sector (PRS).
For a start, we appear to be celebrating the 25th anniversary of the buy-to-let market, marked from the point that specific mortgage products were launched which were tailored to landlords and, as they say, the rest is history.
In some respects, there will be many who might be surprised that not only is the buy-to-let sector still around 25 years on – especially given the number who have prematurely announced its ‘death’ over the years – but it’s also clear how important both it and the PRS is in terms of meeting the needs of UK housing.
Where might we be without the emergence of buy-to-let options? Well, the answer is staring us in the face in terms of a PRS which had dropped to just 10% of all housing stock by the early 1980s. Change was undoubtedly needed.
Now, I appreciate there will be some who point to the strength of the PRS as somehow damaging, espousing a view that without it, we would be living in an owner-occupier utopia where everyone in the country owned their own property.
The facts of the matter are of course rather different to that, and it’s fair to say that without buy-to-let funding, landlord activity, and PRS growth, we would have a much bigger ‘housing gap’ than we already have.
That viewpoint also completely discounts such important economic drivers as social mobility and the fact that, without a thriving PRS presenting options to those who either don’t wish to, or can’t buy, then many people would be ‘stuck’ in their own locales not able to access the job opportunities that might exist elsewhere.
So, the positives of a strong PRS and, of course, the importance of a thriving lending environment enabling landlords of all kinds to secure the finance they need, at highly competitive rates, allowing them to offer different kinds of properties to all different kinds of tenants, should not be underestimated. Long may it continue to function well.
Which leads me onto the new, and it comes in the form of a new Housing Secretary, this time the job going to Michael Gove who appears to a man for all seasons, or rather all departments, when it comes to ‘getting things done’.
Just what areas Gove will focus on remains to be seen, but it would be surprising were he not to put his energies into finding solutions to some rather large problems, namely the cladding issue, the rights of leaseholders, and – a rather big one for the Government – ensuring it meets its target to build 300,000 new homes every year by the middle of the decade.
Given we are just coming out of a pandemic, hopefully that latter one has not been set back too far, but it’s absolutely obvious to anyone active in our sector that supply-side issues remain one of the largest drags on potential activity.
How has the appointment of Gove gone across with the market and industry practitioners? Well, he might like to look away, but a recent survey of landlords suggested that only 11% thought he would be landlord-friendly, and the top priorities that landlords wanted him to focus on were – quelle surprise – for them to be treated fairly, for the Government to deal with rogue landlords, bringing back mortgage interest relief and avoiding too much regulation.
I suspect that we might be whistling in the wind on the last two, but it would seem like a decent ask for the Government to continue to go after rogue landlords and for a level of fairness to be attributed right across the market regardless.
To be fair, in terms of fairness, we might point to the fact landlords were able to access the stamp duty holiday as a move in the right direction. You might wonder whether previous Governments would have come to this decision, and it’s clearly in everyone’s interest to ensure that the small number of ‘rogues’ are eliminated.
However, its highly unlikely that decisions such as those made on interest relief and indeed extra charges for stamp duty will be a priority to overturn, and regulation – particularly focused on improving the quality of rental property and ensuring they meet higher basic standards – is unlikely to be dialed back anytime soon.
But I do think it’s important always to give people a chance in the role before determining what a success, or otherwise, they might be. When you’re new in a position it will take time to get to grips with a large brief and, let’s be clear, Gove tends not to let the grass grow under his feet in terms of implementation. We should find out very quickly how this new Housing Secretary views our sector and the measures that may, or may not, be introduced as a result. Watch this space.
Bob Young is CEO at Fleet Mortgages