Patrick Mooney looks at the latest Private Landlord Survey report
The public image of Britain’s private landlords is often based on an outdated and stereotypical charicature, something like the Rigsby character (as played by the late Leonard Rossiter) in the 1970s TV sitcom ‘Rising Damp’. The reality is that some 45 years on, private landlords are a very diverse group who cannot be so easily pigeonholed.
The latest English Private Landlord Survey report provides a fascinating insight into the views, traits and qualities of the people providing housing for 4.5 million households or a home for one in five of the whole population.
Among the many surprising results was the one that told us 70 per cent of landlords kept their rents at the same level when they most recently renewed a tenancy. In fact the proportion of private tenants’ income being spent on paying their rent was lower at 32.9 per cent, down from the recent highpoint of 36.4 per cent in 2014/15.
The most worrying outcome was the level of awareness of steps necessary to improve the energy efficiency of the country’s privately rented housing. This is something that needs concerted action from landlords, the Government, energy companies and society at large, if we are to reduce the impact of our housing on climate change.
Less exploitation
The average length of time a private tenant has lived in their current home was up from 3.9 years in 2016/17 to 4.1 years in 2017/18. This suggests landlords are prioritising keeping good tenants for the medium to long term, rather than looking to exploit them like a modern day Peter Rachman.
No one is pretending that all landlords are saints, but the days of Rachman the infamous slum landlord who owned hundreds of squalid bedsits across Notting Hill in west London in the 1950s and 60s, are largely long gone.
Investigations by campaigners and journalists still unearth shameful acts by the odd rogue landlord, but they now appear to be a relatively small number.
Conditions in the private rented sector have clearly improved markedly in recent years and that is a cause for celebration.
Evidence of improved standards for tenants comes from the English Housing Survey which shows the proportion of private rented homes with the most serious (Category 1) hazards in them has fallen from 31 per cent of properties in 2008, down to 14 per cent a decade later.
That is an impressive improvement but it still means over 600,000 privately rented homes are in a dangerous condition. Imagine if that was your home, or your parents’ home or that of another loved one. It’s not a nice thought, is it?
‘Unwelcome tenant types’
Meanwhile, large numbers of landlords are unwilling to let properties to certain groups of people, including those in receipt of Housing Benefit and Universal Credit, non-UK passport holders and families. Strangely this is not being ruled as discriminatory or illegal.
52 per cent of landlords and 37 per cent of letting agents reported they would be unwilling to let to tenants in receipt of Housing Benefit. Similar proportions reported they would be unwilling to let to anyone on Universal Credit (47 per cent and 33 per cent respectively). The most commonly reported reasons for not letting to this group included the risk of delays in payment or unpaid rent and the risk that benefits would not cover the rent, with an inevitable increase in rent arrears.
A quarter of landlords and 10 per cent of agents are unwilling to let properties to non-UK passport holders. However, the reasons for this were not explored in the survey so we do not know why this is.
18 per cent of landlords and six per cent of agents are unwilling to let to families. Mostly they said this was because their properties are unsuitable for families and also because of the greater risk of damage to the property.
Fewer evictions
In most cases, landlords and their agents report that it is the tenant’s choice to end a tenancy. Relatively few tenancies are ending in an eviction these days, although for each of the families involved in one they are no doubt still pretty traumatic and unpleasant experiences.
A half of private landlords and agents reported that, in the last two years, they had ended at least one tenancy because the tenancy agreement (of six or 12 months’ duration) ended and the tenant did not want to renew or extend it.
A quarter of tenancies ended because the tenant had moved out before the tenancy had ended. Meanwhile, seven per cent of landlords and agents asked the tenant to leave, seven per cent evicted the tenant and four per cent decided not to renew it.
The most common reasons for evicting a tenant, asking them to leave or not renewing a tenancy were due to rent arrears (58 per cent) or due to the tenant not caring for the property (45 per cent).
Small scale businesses
Most landlords operate as private individuals rather than as part of a company or organisation. 94 per cent of landlords rent property as an individual, four per cent as part of a company and two per cent as part of another organisation.
While almost half of landlords own just one property, a half of private rented sector tenancies are let by just 17 per cent of landlords with five or more properties.
45 per cent of landlords have just one rental property. This represents 21 per cent of the private rented sector. A further 38 per cent own between two and four properties (representing 31 per cent of the sector). The remaining 17 per cent of landlords own five or more properties, representing 48 per cent of the private rented sector.
Since 2010, the proportion of landlords with just one property has declined from 78 to 45 per cent, or from 40 to 21 per cent of the sector. Meanwhile, the proportion of landlords with five or more properties increased from five to 17 per cent or from 39 to 48 per cent of the sector.
Personal circumstances
Landlords are, on average, older and less ethnically diverse than the general population. Most have been landlords for some time. Over half (59 per cent) of landlords are aged 55 years or older. Not surprisingly, given the older age profile, a third (33 per cent) of landlords are retired. The vast majority (89 per cent) of landlords gave their ethnicity as White.
Landlords most commonly reported that they had become landlords because property was preferable to other investments and/or to contribute to their pension.
46 per cent of landlords became a landlord because they preferred property to other investments; 44 per cent did so to contribute to their pension. Only four per cent became a landlord to let property as a full-time business.
The Midas touch?
Landlords, on average, report a gross rental income of £15,000 per year (before tax and other deductions). For most landlords income from rent makes up two fifths (42 per cent) of their total gross income.
The average (median) gross rental income (before tax and other deductions) is £15,000. Three in five (61 per cent) landlords had gross rental income of less than £20,000, while a further quarter (26 per cent) reported between £20,000 and £49,999. Thirteen percent reported a gross rental income of £50,000 or more.
Using their annual reported gross income (before tax and other deductions and excluding rental income) and their gross rental income, it was calculated that landlords received 42 per cent of their total gross income from rental property.
The Green issue
The highest Energy Performance Certificate energy efficiency rating is A and the lowest is G. From April 2018 there has been a legal requirement for all privately rented properties to have a minimum ‘E’ rating on the EPC.
Worryingly almost a quarter (23 per cent) of landlords and agents reported having properties with an EPC rating of E, F or G while a further 15 per cent reported not knowing the EPC rating of their properties. According to a sister report on property conditions, about a fifth (22 per cent) of the private rented sector stock has an EPC rating of E, F or G – this is almost one million homes.
Landlords and agents were asked if they were aware of the new legal requirement for all new lettings to have a minimum EPC rating of E. The results were mixed, with 42 per cent having a full understanding of the details and an equal number not being aware of it at all. The remainder were aware of the new regulations but did not have a full understanding of the details.
Significant improvements are now required if tenants are to benefit from warm and weathertight, dry homes, while also allowing tenants to contribute to society’s efforts to clean up its act, to stop wasting valuable energy resources on heating our homes and to reduce our utility bills.