10 key takeaways from the Private Landlord Survey 2018

In early 2018, the Ministry of Housing, Communities and Local Government began research for the Private Landlord Survey 2018: an invitation-only survey of nearly 8,000 landlords and agents throughout England. The aim? To understand landlords’ and agents’ experiences, as well as to understand more about the homes they provide and the tenants who live there.

This was the first time such a survey has been conducted since 2010, and the full report was released on 31st January 2019. It’s a hefty read – and so to save you the effort, we’ve pulled out the 10 key takeaways that landlords need to know.  

 

1. The last 8 years have seen huge private rented sector growth

The private rented sector now accounts for a fifth of all English households, making it the second largest tenure type in the country.

Between 2010-2011, when the first survey was conducted, and 2017-2018, we’ve seen the number of privately rented households increase from 3.6 million to 4.5 million – a jump of 25 per cent. And the demographic make-up of the sector has shifted too.

While 1.1 million privately rented households included dependent children in 2011, the figure now stands at 1.6 million: a 37 per cent increase, which equates to 35 per cent of privately renting households.

But is the likelihood of steady, long-term tenants decreasing? This year’s survey results show that turnover is high, with those renting privately having higher numbers of house moves than both the social renting and owner-occupied sectors. For landlords, an increased frequency of moves means more administrative work and more regular agency fees – can anything be done to keep these tenants for longer?

 

2. Most landlords do it as an investment

Just 4 per cent of landlords surveyed stated that they went into property rental with the view to it being a full-time business. 44 per cent did so as a contribution to their pension, while 46 per cent stated that it was a preference for property over other investments that led to their decision. 34 per cent, meanwhile, became landlords to supplement other income or earnings.

The number of landlords buying their first rental property intending to use it as a rental property is just 53 per cent while 32 per cent initially purchased the property intending to live in it themselves. This suggests that, for many, the role of being a landlord is an accidental one: in these situations, it is vital that landlords keep themselves well informed about legislation and guidelines to ensure that they are compliant and to avoid any problems.

 

3. Increased regulation isn’t fazing most landlords

For landlords, the amount of legislation and regulation continues to rise, with 2019 promising the end of a consultation on a new housing court, the introduction of the Homes (Fitness for Human Habitation) Act, changes to mortgage tax relief, the Tenants’ Fee Bill and more. While such wholesale changes could impact landlords’ decision as to whether to continue, the majority are positive.

Just 10 per cent of landlords plan on divesting some of their portfolio in the next two years, with 5 per cent planning on leaving the rental business altogether. However, 53 per cent plan on sticking with their existing properties and a further 11 per cent are likely to buy more, meaning the future is looking positive for the private rented sector.

 

4. Evictions are rare

The results of the Private Landlord Survey 2018 show that there are very few cases where landlords need to evict tenants. In the majority of cases where a tenancy ended, it was the choice of the tenant.

In the two years preceding the survey, 50 per cent of agents and landlords stated that they had ended at least one tenancy simply because the tenant did not wish to renew. 25 per cent of tenancies ended because the tenant vacated the property before the end of the tenancy agreement, while 7 per cent of landlords and agents evicted the tenant, and 4 per cent decided against renewing an expiring tenancy agreement.

The most common reasons cited for evicting a tenant, refusing to renew an agreement or asking them to leave were rent arrears (58 per cent) and a lack of care for the property (45 per cent). Strong references and keeping your tenants happy can help you to avoid the risk of any issues occurring in the future.

 

5. Landlords would generally be happy with tenancies of longer than 12 months

While Assured Shorthold Tenancies (ASTs) of six or twelve months are the norm, the survey results reveal that there could be scope for longer tenancy agreements, to provide security for tenants and assurance of continued rent payments for landlords.

40 per cent of landlords stated that they would be willing to offer longer tenancies, with an additional 38 per cent agreeing subject to a break clause that would allow both tenants and landlords alike to end the tenancy. Further numbers of landlords could be encouraged to stretch to tenancies of over 12 months, with the most common condition being that it became easier to remove problem tenants.

These figures correlate with research conducted by PropertyHub in 2018. With such a large proportion of the English population now renting – and with so many unable to afford to get on the property ladder – such tenancies would give tenants – especially those with families – the peace of mind they deserve.

 

6. Compliance with most legislation is standard for nearly all landlords

While rogue landlords are the subject of numerous TV shows and press headlines, they’re actually few and far between. When questioned about their compliance with certain legal requirements, the majority of landlords surveyed are meeting all their obligations.

99 per cent installed smoke alarms on every floor of their most recent rental property, while 87 per cent used a qualified gas safety inspector for their property’s annual gas inspection – with 82 percent providing their tenant with a copy of the certificate. However…

 

7. There was low compliance with other legal requirements

Specifically, only 52 per cent of landlords provided their most recent tenant with a copy of the government’s “How to Rent” guide for tenants – the distribution of which has been a legal requirement since October 2015. 83 per cent of agents did issue tenants with a copy of the guide – but it is vital for landlords and agents to ensure that between them, they have adhered to this requirement to avoid the risk of the “rogue” label. It is also important for landlords and agents to always serve the most up to date version of the ‘How to Rent’ guide to tenants.

 

8. Many landlords avoid certain tenant types

One in ten landlords surveyed stated that their most recent tenant claims housing benefit, the Local Housing Allowance or Universal Credit – but 10 per cent of landlords are unaware whether their tenant claims one of these benefit types. And a tenant’s receipt of benefits is a sticking point for many private landlords.

50 per cent of landlords are unwilling to let to single tenants aged 18-21 who receive Universal Credit, while 52 per cent are unwilling to rent their property to those receiving housing benefit, and 47 per cent of landlords will not let to anyone receiving Universal Credit.

When asked why, 68 per cent stated that they had concerns that there would be payment delays or unpaid rent, while 62 per cent believe that there is a risk that the benefit payments would not cover the whole of the rent.

The survey also revealed a concern that benefits are paid directly to the tenant, rather than to the landlord or agent, increasing the risk (as cited by 55 per cent of landlords) that the rent would not be paid. Finally, 56 per cent of landlords thought that there would be a greater risk of damage to furnishings or property, antisocial behaviour or disturbance if they let to tenants receiving benefits.

However, a good landlord insurance policy should not discriminate against different tenant types.

 

9. Many landlords still misunderstand legal energy efficiency requirements

In April 2018, new regulation came into force requiring privately rented properties to have a minimum EPC energy efficiency rating of ‘E’, on a scale where A is the most efficient and G the least.

While 61 per cent of landlords and agents surveyed in the Private Landlord Survey 2018 stated that none of their properties had an E rating or lower, 23 per cent had properties with an E-G rating, while a further 15 per cent did not know the energy efficiency ratings of the properties in their portfolio.

Further education in the sector is clearly needed: while 42 per cent of landlords said they had a full understanding of the latest energy efficiency regulations, 17 per cent had just a partial understanding, and 42 per cent were completely unaware. Failure to comply could result in a fine of up to £4,000 per property – meaning that it’s vital for landlords to get their properties up to date to avoid further cost.

 

10. 75 per cent of landlords have never held membership of a professional landlord association.

13 per cent of landlords surveyed have current or previous membership of the National Landlords Association, with 9 per cent opting for the Residential Landlords Association, and a further 5 per cent having current or former membership of another professional property or rental organisation.

75 per cent, however, have never been a member of a professional association.

Why does this matter? Membership of such an association offers numerous benefits: as well as discounts on products and services, advice lines and networking opportunities, you’ll benefit from papers, newsletters, magazines, training courses and advice lines that will keep you up to date with best practice, changes in legislation and more. Failing to meet legal requirements could result in hefty fines or even being banned from letting properties in the future: for the sake of your livelihood and your revenue, it’s vital to stay up to date.

The first survey of its kind since 2010, the Private Landlord Survey 2018 is a fascinating insight into the private rented sector, and how landlords and agents operating within their sector acquire, let, manage and maintain their properties. With regular changes in legislation, in the property market and in the demographic make-up of the English population, it’s an industry in a state of constant flux – and one where it’s vital for landlords to be conversant with the current state of the market for the best possible chance of success.

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