Industry News


Private landlords profits fall to a 16-year low


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andlords’ profits have hit their lowest rate since 2007 according to new research, with fears that many of them could leave the


sector for good. Average net profits for investors in the PRS


dropped below 4% in the first quarter of this year, according to a report by property agent Savills, and they are now at their lowest since 2007. Landlords have seen their profit margins hit


by 12 successive increases to the Bank base rate, a situation exacerbated by restricted tax relief. Te Savills report describes 2023 as a ‘turning


point’ for the private rented sector and claims the impact of the current pressures will dictate the shape of the PRS in the future. It warns that, despite growing tenant demand,


landlords’ ability to turn a profit depends on their level of mortgage debt, with smaller buy-to-let landlords reliant on borrowing the most vulnerable, while larger, wealthier landlords are best placed to take advantage of increased demand. Te report also warns of the impact of landlords


retiring from the sector, reflecting findings from estate agent Hamptons which showed 73% of all landlord sales in 2022 were made by landlords retiring from the sector. Te Savills report reveals that a total of 1,911,000 properties are currently owned by 620,000 landlords


caution as landlords now face the prospect of having to invest to bring their properties up to a minimum EPC, further eating into profits.” “Tere is a very real risk that landlords will exit


the sector, particularly those with high levels of borrowing, putting increased pressure on a sector where demand significantly outweighs supply in many locations.” Te NRLA has said the findings added weight to


aged 65 or over, with a further 1,982,000 properties owned by landlords aged between 55-64. Lucian Cook, head of residential research at


Savills said: “Following a boom period for buy-to-let landlords, 2023 marks a turning point for Britain’s private rented sector.” “Between 2014 and 2021, landlords on average


were making ‘year 1’ cash profits of 23% of rental income, but successive interest rate hikes have seen this figure plummet to under 4% this year.” “Te incoming Renters Reform Bill, abolition


of the Assured Shorthold Tenancy, and increasing EPC regulations, are expected to add to investors’


its call for a full review of the taxation of the private rented sector. NRLA policy director Chris Norris said: “Te concerns raised by Savills echo those of the NRLA, which has warned the perfect storm of economic uncertainty, tax changes and increased regulation could have a devastating impact on the supply of homes to let.’ “However there are things the Government


can do to support those landlords who, despite providing vital homes to let, now find themselves struggling to make ends meet. “ “We are calling for a comprehensive review


of the way the private rented sector is taxed to assess the impact recent tax hikes, including


changes to Mortgage Interest Relief and Stamp Duty, are having on supply. We then need the Government to bring forward pro-growth measures to encourage landlords to remain in the sector and continue to invest”.


HA’s severely protracted complaints handling left resident without redress for nearly a year


Te Ombudsman has found severe maladministration in the Hyde Group’s poor handling of a residents’ complaint and its subsequent compensation offer, which was oſten delayed, did not address resident concerns and appeared to require her to accept compensation to close the complaint. Te initial complaint was made in respect of


noise nuisance, but it was the handling of the complaint that the Ombudsman took issue with. It’s Stage 1 response was four and a half months aſter the initial complaint, well outside the


landlord’s timescales and that of the Complaint Handling Code. When the resident escalated her complaint to


stage two, the landlord did not learn from its first response time and took five and a half months to respond to the escalation. Tat only occurred because the Ombudsman issued it with a Complaint Handling Failure Order. Moreover, the landlord appeared to make


its offer of compensation for delays conditional on the resident accepting that the complaint was resolved. Tis led it to presenting the resident with Acceptance Form it seemed like they were expected to sign and agree the complaint was closed. Te landlord’s compensation offer at Stage 1 was


£50. However, with the noise issues still ongoing and the compensation offer not even addressing that as part of its offer, this approach was unacceptable. Tis was increased to £150 at Stage 2. Te Ombudsman ordered the landlord to


undertake a senior management review into its compensation policies and pay the resident £450 in compensation for the failings. In its learning from the case, the landlord said


it has improved its notification system for staff, is clearer with its compensation letters and systems and introduced a new Customer Relationship Management system.


18 | HMMAugust/September 2023 | www.housingmmonline.co.uk


Richard Blakeway, housing ombudsman, said:


“While the landlord’s handling of the noise nuisance itself was broadly reasonable, the landlord’s handling of the complaint responses was very poor.” “Te use of a so-called Acceptance Form where


the resident would be paid compensation in exchange for the complaint to be closed, when it was evident the redress was inadequate and the dispute unresolved, was concerning. Te landlord failed to recognise this approach as unfair and contributed to the lengths the resident had to go to obtain a response.” “In addition, the landlord failed to learn from


its errors in stage one which were repeated at stage two, causing additional inconvenience to the resident. Our Complaint Handling Code, which is due to become statutory under the Social Housing Regulation Bill, requires landlords to deliver fair, accessible and effective complaints procedures.” “We are now hosting monthly drop-in sessions


on the Code and would encourage landlords to sign up to these to ask any questions or if they need guidance on compliance.” Te Ombudsman also found maladministration


for how the landlord communicated with the resident throughout the case, with lengthy gaps where she had to chase for updates. In addition, there were several occasions where it failed to respond to questions and queries.


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