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Landlords & tenants need each other - but are they "polls" apart?

By Georgia Galloway | Wednesday 22nd February 2023 | 6 minute read

UK landlords & tenants are on the same page for much - but are landlords underestimating tenants' concerns?

We conducted separate surveys of over 1,000 landlords and 1,000 renters across the UK to understand how each feels during housing market uncertainty and a cost of living crisis. The survey results highlight the concerns of both.

Many of the concerns are shared, and landlords and tenants are on the same page for much, landlords may be underestimating their tenants' concerns, and whilst the Renters’ Reform Bill looks to assist tenants’ rights, only 60% of landlords are aware of the upcoming bill.

Here’s what we discovered…

Over 50% of landlords will increase rents as the base rate continues to rise - and tenants are concerned.

With the base rate expected to reach a high of 4.5% in 2023, 52.75% of UK landlords will look to raise rents to cover additional expenses. This rise will cause alarm for the 73.93% of renters who are Concerned (37.06%) or Strongly concerned (36.86%) about rent increases.

But tenants should also be aware that 44.66% of landlords will look towards selling their investment properties as rates increase.

And the shift of landlords selling their properties has already begun. The latest RICS (Royal Institute of Chartered Surveyors) residential market survey states, “Smaller landlords are selling up due to rising interest rates and tax increases.” With fingers being pointed at the government for landlords leaving the market, “The government’s continued demonisation of private landlords will come back to haunt them, we are already seeing long-term landlords exiting with very few new entrants.”

Renters facing a supply crisis.

Chancellor Jeremy Hunt has halved the capital gains tax-free allowance for landlords from £12,300 to £6,000 from April 2023 and then in half again from April 2024. With mortgage rates increasing and tax rises landlords are selling up and with few new ones replacing them, fewer rental properties are available, increasing competition and rental costs for tenants.

According to property group Countrywide, the UK's rental sector lost 66 properties a day last year. Landlords sold 35,000 more properties than they bought in 2022. 62.24% of landlords have seen increased property demand over the previous 12 months.

And there is concern amongst renters about the security of their property. 31.07% of tenants are concerned and 15.18% are strongly concerned about losing their property, 35.86% have experienced a lack of properties available in their desired locations and 18.08% have seen the competition for rental property offering more than the asking price to secure the accommodation.

However, some existing landlords will look to take advantage of falling house prices. Nearly half (45.15%) of landlords do think they will invest in property in 2023. 30.27% don’t currently think they’ll invest, and 24.58% aren't sure. 

Energy costs are the number 1 concern for renters right now.

When asked how they felt about different issues currently faced in the UK, such as food costs, rent increases, interest rates, and even the UK economic outlook, energy costs were the biggest concern for renters.

It’s a definite and growing concern with UK household budgets hit harder than any country in western Europe. During what has been referred to as an energy crisis, energy bills have soared for UK households, worsening the cost-of-living crisis. Electricity prices in the UK rose by 65.4% and gas prices by 128.9% in the 12 months to December 2022 -  and households are set to see costs soar further by about 40% from this April.

But whilst market intelligence consultants Cornwall Insight are predicting a return to energy provider competition and increased opportunities for renters to source better energy rates, renters may also take comfort in their landlords understanding the importance of energy performance in their properties.

Our survey of landlords discovered that 48.05% intend to complete energy-performance improvements to their properties over the next 12 months. 

Landlords are seemingly on the same page as tenants regarding the importance of EPC ratings and energy costs, even if they don’t quite realise the levels of concern for their tenants. Almost half of landlords (47.95%) think EPC ratings are Extremely important (20.88%) or Very important (27.07%) to their tenants. Just 17.08% only think energy-performance ratings are Somewhat important, whilst 12.39% seem to have completely misread just how important energy costs are to their tenants and said they were Not important at all to renters.

Renters’ fears over the threat of eviction.

Our survey discovered that just over half of UK landlords (51.05%) have had to evict tenants from their properties.

Of those landlords that have evicted tenants, the most common reasons chosen were antisocial behaviour (47.55%), the exercising of a ‘break clause’ before the end of the fixed term (45.99%) and rent not being paid (44.23%).

Our survey of over 1,000 renters discovered that 11.59% had experienced the threat of eviction, whilst 12.89% have felt they’ve been unable to complain about poor property conditions for fear that it might lead to eviction.

Concerns experienced by renters - if landlords aren't aware currently, they should be.

In addition to the fears over rental increases and the threat of anxiety, our UK Renters' Report has also discovered tenants are experiencing the following issues:

• Problems with damp or mould - 33.73% of UK renters
• Anxiety due to renting - 27.07%
• Poor property conditions - 24.98%
• Excessive delays on maintenance repair work being completed by a landlord or letting agent - 22.08%
• Unresolved maintenance issues that were reported to a landlord o letting agent - 21.48%
• Frustrating due to renting - 21.48%
• Unaffordable rent increases - 19.38%
• Being ignored by a landlord or letting agent - 18.78%
• Excessive delays in communication from a landlord or letting agent - 15.68%
• Security deposits not being returned in full - 13.79%
• Unable to complain about poor conditions for fear it might lead to eviction - 12.89%
• Unable to complain about poor conditions for fear it might lead to rent increases - 12.69%
• The threat of eviction - 11.59%
• Difficulties with tenancy renewal - 10.69%
• Harassment from the landlord or letting agent - 8.39%

Landlords should be aware - renters want to own but know they won't be able to soon.

Over 80% of renters in the UK want to own a property. But they know they won’t because they can’t save enough for a deposit, which is hardly surprising given the current economic landscape. But with only 14% of tenants preferring to rent over the prospect of owning, renters are also unable to purchase due to mortgage rates, the inability to secure a mortgage and fears over a property crash.

Final thoughts

Whilst the relationship between landlords and tenants can be complicated, and one subject to many external forces, especially in the current economic climate, there are common fears and concerns for both. And whilst landlords are aware of their tenants' concerns, they may underestimate their impact and severity.

The Renters’ Reform Bill act is to be voted on before May 2023 and proposes significant changes that will significantly impact private landlords and their tenants. However, only 59.64% of landlords are aware of the upcoming bill. 

The bill will be the most significant change in residential letting laws for a quarter of a century providing greater protection to tenants. With 27.07% of renters experiencing anxiety due to renting, the changes will be welcome. 

19.38% of tenants have experienced unaffordable increases in rent and a combined 73.93% are either Concerned (37.06%) or Strongly Concerned (36.86%) about future rent increases; therefore increased rights over rent increases will be a relief.

The new rules provide tenants with a higher level of protection with restrictions on rent increases and stricter housing standards.

Landlords must be aware of the coming changes: no-fault evictions will be banned and tenants will be given more power to challenge landlords who fail to meet their obligations. This could result in penalties for landlords including fines. The new rules also risk overburdening landlords which could result in their leaving the rental market.

The private rental market is vital in the broader UK housing market. It provides accommodation for those unable to get on the property ladder and landlords with an income. But with increasing rates and tax rises, landlords are under significant pressure, with many looking to leave the market altogether. Renters are experiencing anxiety and fears over energy prices, rent increases and the UK economic outlook. These are uncertain times for the UK rental market, and landlords and tenants must work together to navigate the current climate. Whilst landlords and tenants haven't always been considered equals, it’s clear that in today’s housing market, their relationship is more symbiotic than ever before, each party 100% requires the other to survive.