According to the latest market analysis by Octane Capital the private rented sector (PRS) market could lose £223.5bn in value if a consistent string of legislative changes successfully eradicates the amateur landlord.
The research suggests that such a move could reduce PRS market stock levels by 383,600.
Currently, the PRS accounts for 18.8% of all dwellings in the UK, which is roughly 5.6 million homes.
These properties are owned by 2.74 million landlords, with each landlord owning an average of just over two properties.
However, the number of landlords could decline significantly as the government’s legislative changes are designed to reduce landlord profit margins and deter buy-to-let investment. This move has hit amateur landlords the hardest.
It is estimated that 14% of the UK’s buy-to-let landlords are amateur landlords who own only one rental property, equating to 383,600 landlords and the same number of privately rented homes.
The impact of the loss of amateur landlords would be significant, as it would result in a 14% stock reduction, with the PRS losing 383,600 of the 2.74 million homes currently available across the sector.
The estimated average price of a buy-to-let property is currently £285,915, which means losing this many homes would reduce the PRS’s market value by £223.5bn.
Jonathan Samuels, CEO of Octane Capital, said that eradicating the amateur landlord through legislative changes is not a practical or reasonable solution.
The answer is to build more homes, he said. He also added that tenants would bear the brunt of the shortage in stock, with the cost of renting only increasing if stock levels decrease further.
