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Landlords reject alarmist data

RLA
Written by RLA

The RLA is rejecting alarmist rent data published today. Figures produced by LSL suggest that over the past year, rents across England and Wales have increased by 1.4%…

The RLA  is rejecting alarmist rent data published today. Figures produced by LSL suggest that over the past year, rents across England and Wales have increased by 1.4%.

This data however is undermined by the more comprehensive and independent data from the Office for National Statistics showing rents between March 2013 and 2014 have increased by just 1% over the year whilst inflation as measured by RPI was 2.5% and by CPI at 1.7% over the same period.

The RLA is also distancing itself from LSL’s assertion that landlords are making substantial returns.

Official figures show that 79% of all landlords earn less than a quarter of their income from letting properties with 21% earning no income at all from it.

This was confirmed by the findings of a report for the RLA by Professor Michael Ball of Reading University who has concluded:

“that current returns in the private rented sector are extremely low and are likely to remain so. The resultant damage to the private rented sector could be huge, because the availability and cost of privately rented accommodation depends on landlords’ making viable returns on their investments.”

More recently, an analysis by the Daily Telegraph has warned also that a number of buy-to-let landlords “could see their cash flow turn negative as early as 2017 if interest rates rose to the levels hinted at by the Bank of England Governor, Mark Carney.”

Responding to the LSL data, RLA Vice Chairman, Chris Town said:

“Whilst many have chosen to cherry pick the data on rents they want to use to suit their argument, the reality is that the most comprehensive, ONS data shows clearly that rents are increasing by much less than inflation. Whilst there are some pockets of the country, especially in London, where rents are increasing substantially this is as a result of a chronic lack of supply of homes to rent, not landlord profiteering. It would be wrong and dangerous to make assumptions for the whole country based on London and the South East Alone”.

Turning to LSL’s assertions on landlord returns, Chris Town continued:

“On returns, LSL’s figures fail to outline the considerable costs that landlords face in managing, maintaining and repairing properties. With interest rates likely to increase in the near future prospects for landlord finances remain uncertain.

“The reality is that landlords have to make some return to cover their costs. The question for those who spend so much time bashing landlords is what return they feel is reasonable for landlords to make. Only then can we have a sensible debate.” 

About the author

RLA

RLA

The Residential Landlords Association (RLA) represents the interests of landlords in the private rented sector (PRS) across England and Wales. With over 23,000 subscribing members, and an additional 16,000 registered guests who engage regularly with the association, we are the leading voice of private landlords. Combined, they manage almost half a million properties.

6 Comments

  • LSL own, among other companies, esurv surveyors, by whom I was employed after they took over Reeds Rains.
    My experience of esurv ended with my wrongful dismissal in 2008 which was subsequently confirmed by the Employment Tribunal. Consequently, I might easily be accused of having an axe to grind. However, I found their style of management, lack of attention to detail and general ethical standards to be sadly lacking. What is amazing is that anyone pays any serious attention to them.

  • This LSL report does not seem to differentiate between rents in the private rented sector (PRS) and in the public (local authority) rented sector. My understanding is that PRS rents have increased way below inflation, whereas council rents have increased markedly. How can councils justify such increases?
    From my limited experience of managing a small portfolio of houses, rents next year will be 0.3% lower than last year! This is due to (1) loyalty to tenants who renew, (2) tenants having financial difficulties and (3) student tenants who also face financial challenges.
    In addition, I would have thought it totally reasonable and acceptable that rents in all sectors should increase by inflation, whether RPI or CPI.

    • As a private landlord with only a few properties I can confirm that almost all of my rents have remained the same for the last two years, due mainly to market conditions and in order to retain loyal tenants. The one rent which did increase on a tenant change went up by £25 per month – hardly profiteering.

  • Chris Town says that increases in places such as London “this is as a result of a chronic lack of supply of homes to rent, not landlord profiteering”.
    This is a bogus argument. The shortage of supply creates a condition in which profiteering becomes possible. Without a shortage of supply, profiteering is not possible.

    • Hi simhedges, thanks for the comment.

      The RLA continually champions and supports any move towards building more homes to tackle the housing crisis.

      More homes are needed, hopefully all parties will commit to confronting the housing crisis in the upcoming election next year.

      The RLA is a ‘core partner’ of the Homes for Britain scheme that looks to ‘end the housing crisis’ in a generation.

      We are acutely aware that tenants need safe and affordable housing and we provide our members with the tools and resources to provide a level of professionalism that should be expected in the PRS.

      Regards,
      RLA Campaigns

  • Forgive me. but I don’t understand what is alarmist about rents rising 1.4% this year per the LSL survey. If this is undermined by the the (lower) 1% increase from the ONS stats this suggests that the 1.4% figure is considered too high.

    This seems odd given the inflation measures quoted in the text. Overall I would have thought that a 1.4% increase when CPI is 1.7% is immaterially different and possibly within statistical error.

    Please help me if I’m missing something …………………..?

    thanks adrian

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