How do landlords selling up impact the rental market?

[Rispa42]

Genuinely curious because it’s been said that one of the reasons the rental market is heating up is because BTL landlords are selling up, and therefore leading to an imbalance between supply and demand. However, if they sell, they’d either sell to another landlord (therefore not impacting supply) or to a FTB who was previously renting (therefore reducing ‘demand’). What am I missing?

Proffesional landlords are not selling up so much, it's more the amateur small scale overleveraged types - that had based thier business model on cheap borrowing. It's a good thing to get rid of these as they could never really afford to be landlords in the first place, but were encouraged by the lure of easy money. Now that it's not so easy they want out.
Temporarily we are going to see more pressure on rental supply as they exit. Its worth remembering though the property they sell either goes to a landlord who can afford to actually buy to let (rather than just borrow to let). Or it goes to a new generation of first time buyers who were renters. The supply will balance out again relatively quickly. It's just a short term bump as those with massive debt exit. The idea that any significant number of shabby ex rentals will be bought by people as second homes in a falling market is just laughable.

A lot of FTB are living at home with parents to save a deposit, therefore the house goes to someone new and the tenant has to fight for ever decreasing housing stock. The EPC C rating is driving lots of landlords out, as most terrace etc are stuck at around a D maximum which can include properties worth upwards of a million pounds. Add to that higher mortgage rates and lower tax deductibles = crisis

Not all are over leveraged, I know several people who are just moving to air bib or leaving the property empty as it's too much hassle. The idea that these are all shabby places is also erroneous, most of the small landlords who I know are renting places, they have previously lived in, to young professionals, not shabby places at the bottom of the market.

@DrySherry I don’t agree with you allegedly the majority that are leaving have 1 or 2 homes they have looked after them well but with the abolition of section 21 and the renters reform bill they are changing business model to air band b / holiday or exiting so I don’t think it will bounce back and as it stands now there are not enough homes this is not going to help the situation. Obviously I hope you are right but I wait to be convinced

@jenandberrys i know exactly not shabby atall

@Parsley1234 if HAs (or corporate landlords)are rubbish then there should be more scrutiny. Having more individual private landlords in the market won't make that happen, they seem two unrelated things.

@ThreeFeetTall but there isn’t there should be but there isn’t the private landlord is an outdated business model now watch the mess that is coming down the tracks there is not enough housing stock

@jenandberrys do you know many inner city HMO landlords?

Why? Are you under the impression that is the only type of landlord there is? Does any of what I have posted suggest that I am talking about inner city HMO landlords?

I can only speak for our area locally. The vast majority of the rental stock that's suddenly up for sale is in no way suitable for holiday, second home or air b&b. It's bottom of the rung badly maintained flats and HMO's in not great areas. I can appreciate though that rental stock in other areas might be different.

@DrySherry which location are you please ? I am in Gloucestershire and the market is robust according to the agent who is selling mine. We had over 40 applicants for my friends property I manage normally would have max 5 and a lot had a years rent upfront only way they could get a place it’s a total mess

Holiday lets & Air BnB.
In many parts of the U.K. up to 40% of rental homes get sold and converted to Air BnBs or holiday lets,

It is likely to be area dependent. Definitely not the case in the areas I am familiar with, I am talking about the 500K + market

In the area where I live, many LL are selling up, but the properties are being bought by developers to make into holiday apartments etc. It’s not good.

@jenandberrys yes it’s going to be a rocky road for flats and cheaper areas for sure

John Lewis and Lloyds/Pension companies are not buying 130 year old houses and opening up themselves to unknown maintenance and EPC charges.
Does Hertz Rent out 5 year old cars?

@C4tastrophe they absolutely are not they have shiny new new builds with shiny new tenants fuck the other tenants who are not so shiny I’m alright Jack or John (Lewis) 🤯😳

The current extra pressure on rentals is already creating a new investment build boom. Don't worry, this is just a temporary shortage of supply whilst the corporate machines get into gear. Whether or not they will be better landlords is another question entirely.
https://uk.finance.yahoo.com/news/city-investors-land-grab-rental-175757511.html

be interesting to see how that pans out if we go into a massive recession

@jenandberrys what I meant was that just because you personally know lots of great landlords (and there are lots of great private landlords) that doesn't mean the people you know are representative of landlords in general.

I think air b and b is a big factor, for a landlord is probably easier to leave the normal rental market and move to the holiday let market. Which means less homes.

Well obviously. I never claimed they were any more representative of all landlords then shitty landlords running mould ridden HMOs. However the idea that all landlords who are selling up are highly leveraged and have shitty properties as was posited earlier is not accurate and representative of all landlords, i assumed it was fairly clear from my post that I wasn't suggesting the type of landlords I know are representative of ALL landlords.

Personally I think it will do very well as rental demand increases. Private equity funding will get the job done much quicker than governments or councils could - and most importantly it is going to be done with big business efficiency. The overall quality and service will hopefully be better too for renters. I'm considering investing.

After reading that yahoo news just solidifies what I know I am leaving the buy to let market after 25 years and going into air b and b. It’s an absolute total mess and thisexehobthinknits going to reform the rental market yes it is but not in a good way these are equity firms wanting to make profit out of homes and that is worse than small investors ? I don’t think so

My DC have around 10 years of renting between them as students. They've been very lucky with their landlords. The one thing the corporate landlords had in common was that they were ridiculously expensive.