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What the private rental sector can expect from 2019

Friday 11 January 2019

By Carl Agar

So the New Year is upon us, and business continues as normal - but what can we expect in the private rental sector (PRS) in 2019?

Personally I think this year is going to be a telling year for the sector. Last year was tough, but this year landlords will really start to feel the effects of changes in the market…

On a positive note I think the sector will continue to grow as demand continues to increase. I also expect rents to rise - as a result of both general supply and demand forces - but also in reaction to the increased costs resulting from new legislation and tax changes.

Now the not so positive! I believe 2019 will be the year that landlords either decide to adapt and survive - or leave the sector all together. For those willing to roll with the punches and adapt their business models, there is certainly opportunity. But it won’t be for everyone.

The last few years have seen a drive for professionalisation, and we’ll certainly see more regulation and more licensing requirements in 2019.

Ultimately, that means the game has changed completely for some landlords. If they don’t have the appetite to change and don’t want to play by the new rules - then one way or another they will either exit or be forced out.

The smaller, accidental landlords, and/or those who’ve been in the business a long time are those most likely to leave. I think what we’ll be left with is fewer, bigger landlords, and a more professional PRS as a result. I also don’t think that’s necessarily a bad thing.

So where are the pressure points?

One of the things that will begin to pinch this year is the section 24 tax changes. Landlords will get a feel for what their next tax return is going to look like, and that will almost certainly make them realise that either they need to rethink their business models.

Landlords will have just about adjusted to the new HMO regulations in time for the Tenant fee ban, which is getting ever closer, and will add further financial pressures to both landlords and agents. I suspect we will also see the introduction of Mandatory Electrical Certification and maybe even the new three-year tenancy! All of which further support that ongoing drive for professionalisation - and put further pressure on accidental landlords.

Finally, let’s not forget Brexit! I get asked a lot what I think the impact of Brexit will be and the truth is that nobody can answer that question accurately. The sector is at risk in the sense that 25% of the tenant base in the PRS is made up of EU nationals - and it’s that area where the impact could be felt the most. Ultimately this will depend on whatever the final Brexit agreement looks like and the impact on those EU nationals residing in the UK.

Whilst 2019 may be daunting for some, I would urge you to see this year as an OPPORTUNITY.

Take up the challenge, professionalise your property business and pull together your growth plan!

If you are one of the big, professional landlords – or aiming to get bigger and more professional – it’s going to be a great year.

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We want to add value to landlords with interesting news and views! Our Hub includes information and opinions on the housing market from a variety of expert sources – please just be aware it doesn’t always reflect Simple’s opinion, or the products and services we provide.

Article by:

Carl Agar

Carl Agar

Carl Agar is the managing Director of Big Red House letting agents, founder and Chief Executive of The Home Safe Scheme, has been the Yorkshire representative of the National Landlords Association for the last decade - the UK’s largest landlord association, as well as being a Landlord and Investor.