Trade body warns overregulation risks reducing rental supply and driving up costs for tenants
There should be a more balanced approach to government intervention and regulation in the private rented sector (PRS), according to the Intermediary Mortgage Lenders Association (IMLA).
The association is urging policymakers to avoid a one-size-fits-all approach to regulating landlords and to recognise the significant role smaller landlords play in the market.
IMLA has released a new report that examines the potential impact of measures such as the proposed Renters’ Rights Bill and future energy performance requirements, while outlining six recommendations to create a more effective policy framework.
Its analysis highlights the importance of the PRS, which currently houses nearly 20% of UK households. According to IMLA’s landlord survey, conducted in December 2023, 80% of landlords own just one or two rental properties, while 13% are portfolio landlords with four or more properties.
The report warns that heavy-handed regulation could disproportionately affect these smaller landlords, who own 61% of the rental stock, leading to higher costs for tenants.
IMLA argues that while some reforms in the Renters’ Rights Bill may be justified, the cumulative cost of over 100 regulations introduced since 2004 is putting significant financial pressure on landlords. The association warns that rising costs could drive landlords out of the sector, reduce housing supply, and result in higher rents — undermining the intended benefits of regulation.
The report also cautions against the risk of rent controls, which IMLA says could discourage new investment and force some landlords to exit the market. Such measures could ultimately lead to higher returns being required by remaining landlords, further increasing rents.
Another key issue raised is the government’s proposed deadline for PRS properties to achieve a minimum energy performance certificate (EPC) rating of ‘C’. The lenders association argues that this requirement unfairly targets private landlords, as similar rules do not apply to owner-occupied properties. The IMLA report warns this could drive landlords of low-rated properties to sell, reducing rental supply and exacerbating affordability issues.
IMLA believes the market itself is capable of improving standards, provided tenants have adequate choice and competition. However, regulatory measures that restrict supply by driving up rents could limit tenants’ options, the report says.
“The government’s long-term plan to massively boost much-needed social rented accommodation is very much welcomed, but cannot come at the expense of the UK’s private landlords, who currently play a vital role in providing homes for 20% of the country’s households,” said Kate Davies (pictured), executive director of the the Intermediary Mortgage Lenders Association.
“IMLA is reiterating a call we have been making for some time, for policymakers to take action to ensure those landlords feel confident enough to remain in the sector and continue to offer this essential housing for the country’s renting population.
“Continuing to heap expensive regulation on the sector risks pushing out more of the smaller landlords who make up the lion’s share of providers, creating a vicious circle of fewer rental properties available and higher rents for tenants.”
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