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Landlords won’t ‘follow the dodo’ yet: Countrywide’s Morris

Climate, predators and sustainability are factors landlords face but talk of them going the way of the dodo is premature

Any nature programme will show you just how far animals have had to evolve over the years to survive and prosper. Climate, predators and sustainability are all factors that can inhibit the future of any one species.

And it is not only those out in the wild that have to adapt to endure and potentially flourish. Anyone operating in and around financial services has to constantly take note of changing conditions and move accordingly.

Concerns have been raised recently that landlords may be going the way of the dodo due to increased regulatory focus and tax changes. Thankfully, this is not the case. They are already proving remarkably resilient in their own way. It comes as little surprise that our research shows landlords are changing their behaviour, both in response to recent policy changes and longer-term trends.

They are now much more likely to own more than one property (37 per cent do, up from 22 per cent in 2010), which is a sign of a maturing sector.

It is also increasingly likely that investors purchasing new properties will do so as a company. The demands surrounding where and what landlords are purchasing is also changing. This is in part aligned with the housing market cycle, although it also signifies a need to look further afield for higher yields. Nevertheless, capital gains are the main reason landlords invest in property.

Looking forward, it is likely that fewer investors will own more stock and the build-to-rent sector will continue growing. Its current operating model has the potential to capture one in five UK renters.

The structural shifts in economic and housing forces driving the expansion of the rented sector are unlikely to change any time soon. But tenants will increasingly find themselves with the choice of renting from a small landlord or an institution; a choice which will invariably drive up standards.

And while smaller landlords will have to adapt in the face of competition, they will provide most rented homes for decades to come. Let’s hope that any talk of their extinction disappears sooner rather than later.

Johnny Morris is research director at Countrywide


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