“Orwellian undertones” – brokers divided on current state of buy-to-let

As financial and regulatory pressures continue to affect landlords, many with smaller portfolios or single properties are reportedly being squeezed out of the market, but institutional investors are increasingly moving into the private rented sector.

Lloyds revealed plans to become one of the UK’s biggest professional residential landlords via its Citra Living brand, while John Lewis also entered the private rented sector (PRS) recently.

However, according to feedback gathered by Newspage, property experts and brokers were divided over whether this transformation of the rental market would be a positive.

Imran Khan, co-founder of PropertyLoop, said: “In a market shifting toward institutional investors such as Citra, John Lewis and major supermarket chains, the UK property landscape is transforming.

“This mimics European trends, where institutional landlords are more common. Pros are more professionalism, compliance and potentially a stable environment for tenants.

“However, this doesn’t mean it’s an all-round win. Institutional landlords are more likely to focus on affluent areas, leaving a gap in affordable housing, a sector where individual landlords have played a crucial role.”

Graham Cox of Self Employed Mortgage Hub, said the institutionalisation of the PRS is a move being favoured by the Government.

He added: “The current administration is ideologically averse to building social housing at any great scale.

“They think the private rented sector can take up the slack. At least that’s what their paymasters — the house builders, banks and insurers — have told them.

“They absolutely envisage a future where big corporations will own most of the privately rented housing stock, house prices continue to soar, and the average Joe is priced out of owning their own home.

“It’s already happening, with even John Lewis recently announcing they are investing in Build to Rent.

“Unfortunately, this Government knows the price of everything and the value of nothing.”

Cox’s views were mirrored by Lewis Shaw, founder of Shaw Financial Services, who said: “The institutionalisation of buy-to-let and the private rented sector (PRS) is a growing narrative but one that has slightly Orwellian undertones.

“Yes, anything that seeks to improve the lot for tenants who have been bled dry over the past twenty years can only be a positive as long as there’s a solid government framework that properly regulates landlords and improves the stock of UK housing as it goes.

“My main worry is that we are hurtling headlong into a neo-feudal society where big business controls how and where you live, and more importantly what you pay.

“If ever there was a reason for young people to buy their own home before it’s too late, the institutionalisation of the rental sector has got to be it.”

Joe Garner, managing director of Joe Garner Consulting, agreed: “In a darkly amusing turn of events, the Government has been diligently reshaping the buy-to-let market ever since Section 24 of The Finance Act took the stage.

“Initially, it seemed like a move to control the Private Rental Sector and champion homeownership.

“But the real agenda has now unfolded: a massive shift of private property into the hands of corporate giants and deep-pocketed investors.

“While renters in swanky city centre pads may see an uptick in living standards, it’s a distant dream for most.

“The rental costs in such places are stratospheric, leaving the majority out in the cold. We’re headed for a clear division between the haves and have-nots in property ownership.

“Those with inheritances or hefty deposits are the fortunate ‘haves’, while the rest struggle. As always, it’s the less fortunate who bear the brunt of this dark comedy.”

For Khan, though institutional landlords do have a role to play, amateur landlords should not be forced out and are essential to maintain balance: “It’s crucial to maintain a balanced ecosystem of both institutional and individual landlords.

“Each has its pros and cons and a symbiosis is needed to meet the housing demands across different sectors and regions.”

Stephen Perkins, managing director of Yellow Brick Mortgages, also said smaller landlords were essential for the lettings market to properly function.

He added: “Government policies appear to be pushing towards having large corporate portfolio owners and a population who cannot afford to buy their homes trapped to forever rent. Landlords need some support, as they are crucial to the letting supply ecosystem.”

Peter Stamford, director of Moor Mortgages, shared Perkins’ views: “The Government is pushing homes into big corporate hands, sidelining everyday landlords.

“These big players chase profits, often ignoring affordable housing. We need both small and large landlords for a fair housing market.

“This direction risks creating a divide: those who own homes and those forever stuck renting. We need to challenge this before it’s too late.”