Matt Hutchinson, director of SpareRoom said: “Not all landlords are big businesses. Almost 45% only have one rental property, some of whom have their life savings tied up in their rental property.
“If landlords feel like they have no choice but to leave the market, renters will suffer. Lack of supply is already inflating rents, but if landlords follow through on their intentions, the problem will become even more severe.
“While common-sense rent reforms will offer tenants greater protection, there is neither support nor incentives for landlords, and nothing in place to protect the market from volatility, which is what we’ll see more of if landlords don’t see the sector as an opportunity worth investing in.”
Why landlords say they’re selling up
The warning of landlord exodus has been repeated consistently ever since then-prime minister Theresa May announced that section 21 evictions would be axed almost six years ago.
It looks like Labour’s rent reforms will finally deliver on that promise this summer through the Renters’ Rights Bill.
The bill, which is currently making its way through the House of Lords, seeks to reset the power balance between tenants and landlords, shifting it towards renters with a number of measures to improve property standards and eviction protections.
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Ministry of Justice statistics, released this month, show a rising number of landlords were taking their tenants to court to evict them.
The government figures showed 24,010 possession claims were submitted to the courts by private landlords in October to December 2024 – up 3% on the same period in 2023 while there was a steep surge in tenants being evicted by county court bailiffs.
Patricia Ogunfeibo is a non-practising solicitor and who has been a landlord since 1986 who recently published Be Prepared: Renters’ Rights & Residential Landlords, aimed at helping landlords understand the likely changes with the forthcoming Renters’ Rights Act.
She told the Big Issue that she is looking to halve her portfolio.
“It’s not really profitable but that’s not the main reason why I’ve been selling and I’m still going to be selling,” said Ogunfeibo.
“First of all, don’t get me wrong, we needed the private rented sector (PRS) to be reformed. No question about that, that had to be done. The only question was, how could it best be done?
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“I don’t think that either government actually addressed the real issues. I think they were more about winning votes than actually really reforming the PRS. And there’s nothing that could come of this apart from a pyrrhic victory. Sadly, the people who are going to pay the price of all of this – and it’s all about politics – are going to be the tenants and that really saddens me.”
Ogunfeibo said she would like to see “more fairness” from the reforms and that she thought that the new red tape she would have to comply with would diminish the joy she gets for renting out homes.
“I used to be a solicitor and then I gave up in 2015 because I thought, you know what, let me do something that is going to make me feel good: get awful properties and make them into lovely homes and let them out to people. All of my pension I put into my portfolio. It wasn’t perhaps a wise decision to do but I did it.
“I felt good that I was providing good homes for people. But right now, the risk is way too high and I’m not willing to risk my future on what is going on at the moment. Another reason why I’m looking to exit is financially it’s just not worth it. Another reason is that landlords in the bill feel as if we’re being criminalised.”
She added: “Do I need this right now in my life? I’m 61, I really don’t. I should really just be relaxing, not just rushing around. I’ll still be making nice homes for people. It just won’t be to rent. It’ll be to sell.”
Many of Ogunfeibo’s tenants have told her that they cannot afford a deposit.
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The private landlord insisted that tenants have more options than they think.
“When I was younger we had the same problems. It was difficult to get anywhere decent to rent and that is what actually encouraged me to buy my first property,” she said.
“I’d queue around the block, and I’m talking the 80s now, and you’d go in and you’d be judged, and the answer would be yes or no. And in my case, mostly it was no. It was very demoralising. I just thought, you know, I can’t keep on doing this.
“Fortunately, I had good earning potential. Got myself a job, got myself a mortgage, bought, but it was not easy. Nothing is easy.”
Why landlords selling up could be a good thing
Not everyone believes that a landlord exodus is on the cards – or that it would be a bad thing.
After all, while selling or no longer renting a property out might remove it from the market for the short-term, the property remains part of the country’s housing stock and can be bought by someone to live in, another landlord to rent out again or be turned into a short-term let.
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In response to our coverage of the issue, several Big Issue readers responded to say that it would mean more homes on the market for people to buy at a time when private rents are at record highs, making it tough to afford out-of-reach house prices.
Rightmove noted back in September that there was a rise in landlords selling up with almost a fifth of homes for sale previously available on the rental market, compared to 8% in 2010.
But Tim Bannister, Rightmove’s property expert, played down talk of an exodus.
“Despite the trend of more landlords choosing to sell up, it doesn’t appear to be a mass exodus, and we will need to monitor the longer-term impacts of what happens to the rental supply that is put up for sale,” said Bannister.
“For example, these homes could provide first-time buyers with more choice. They might also be purchased by other landlords and put back into the rental market, which would signal a changing of the guard rather than a complete exit from landlords.”
Despite the long-running threat of rent reforms, the private rented sector has remained around 19% and 20% of England’s housing stock in the last decade, according to the English Housing Survey.
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Speaking at the most recent Lords debate on Labour’s reforms, Lord Richard Best – a peer with extensive experience in the housing sector – suggested that landlords who wish to sell should be encouraged to work with social landlords.
The peer said the government should consider an exemption from capital gains tax if landlords sell to a housing association to boost social housing.
Lord Best argued that the scheme would slash the housing benefit bill and “pay for itself” over time. He said: “If the PRS were to continue to shrink by about 2% annually, the outcome could be positive, with both an additional 500,000 home owners and 500,000 more social tenancies.”
Would Ogunfeibo be willing to take up this offer?
“It’s something that I would be interested in, because if I’m selling, I’m selling, if there’s a buyer, there’s a buyer, I’d be happy,” she said.
“But I don’t think that would be taken up by the government, because they like their capital gains tax. And, also, a lot of the properties that people are selling are not really going to be conducive to councils and social housing when it comes to actually buying them, but I think it is something that would be good where it can be accommodated.”
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