Uk Rents at an All-Time High

These are the big ones and most landlords haven’t got a clue what lies ahead. They really haven’t.

I am old enough to remember what things were like before the 1988 Act. By the time the Act brought ASTs into existence for new lettings, without rent control and with the ability to regain possession, the only people who owned rented residential properties were wealthy people looking for deferred returns. This is how it worked. The method of valuation was to take the vacant possession value, obtain information about the age of the tenant and anyone who had succession rights, use Parry’s actuarial tables to assess the statistically expected time until the last person with succession rights would die and vacant possession might be expected, then discount the VP value to allow for this period of time. Generally it was expected that any rent which was allowed by the Rent Officer would pay for basic repairs and nothing else. In some cases the Regulated Rents were so low that they didn’t even cover repairs so those properties would be assumed to be loss-making during the period of ownership. Essentially rented properties were seen as equivalent to discounted nil coupon bonds and they were bought by people who had high incomes on which high rates of income tax had to be paid, but capital gains tax was much lower - it didn’t even exist until 1965. So for a typical regulated rent property with a single elderly tenant, say 70 years old, who had nobody behind them with succession rights, you would decide on a discount rate, get the expected remaining life from the actuarial tables, and pay perhaps 50% to 70% of the VP value. But this only worked if you had a lot of properties because obviously the tables couldn’t tell you when any particular tenant would die, they were only reliable if you had a statistically significant number of tenants. The landlord would then expect a number of tenants to die each year, at which time the properties would be sold with vacant possession, and the landlord would get their return as the difference between purchase and sale price, a capital gain, which was tax free until 1965.

Guess what happened to the supply of decent modern properties for rent. It was negligible from 1965 to 1989, in some areas non-existent. Tenants who had regulated tenancies rarely left voluntarily, they stayed put until they died, and every regulated rent property that became vacant was sold immediately to owner occupiers. Meanwhile the Housing Act 1980 brought in the right to buy council houses, taking another huge chunk of supply out of the rented sector. The reason the conservatives passed the 1988 Act was because there was a desperate need for rented houses and the conservatives naturally thought the private sector would supply what the public sector had been providing. They were right. The supply of rented houses increased.

There are two possible ways ahead. The first is that we lose s.21 but there is no rent control. In those circumstances the Private Rented Sector might survive because once a year there would be an opportunity to increase the rent to market levels, and we have been told that it will be made easier to evict defaulting tenants (personally I disbelieve this). The second is that the combination of the abolition of s21 and the re-introduction of rent controls will lead to an almost complete destruction of the PRS, quite rapidly. Apart from anything else no lender will be willing to provide mortgages for PRS houses because their value as security will reduce and there will be a risk that rent controls will drive landlords into insolvency.

We have sold 1/3 of our properties. I am trying to persuade my wife that we should sell the rest, ASAP. If we wait for the bill which was announced in the Queens Speech, and it includes rent controls, we will be competing with a huge number of other landlords also trying to get out, all at the same time.


to be fair, the word lockdown originates from its use in prisons, so is even more severe than “house arrest”!


Impressive rant! Hope you cut and paste that from somewhere!

I apprecaite your sentiment, but the bare monthly cost of renting and buying are not equatable, in a leasehold property, a tenant pays no service charge or groundrent, is not resposible for replacing the boiler, servicing there of nor any other issue, a flat owoner of a cladding impaired block is unable to sell or remortgage to a different lender, the costs of moving a tenancy are often cited as a reason for abolishing the S21, such costs are FAR lowere than the cost of selling and buying, a tenant has no such difficulties. I advocate ownership but not all tenants can or wish to adopt the other side of the coin

Had the cost of house not gone so daft, I would be buying more. I cannot think of a more solid investment. Anyone would have a job to steal it from you, someone pays for it as it appreciates, and property has made me very financially comfortable. But you have to be a jack of all to make it pay, rely on a managing agent to take his cut and charge you £270 for something that would cost me £20 is not the way to go


if the tenants have a fixed term contract can I put up the rent with notice ?

Re my comment above about selling up, well it’s happened, tenants gave notice, I’m calling the EA today. This was a particularly popular let, it’ll be nice not to have to face filtering out the 100+ applicants I likely would have got.

I feel sorry for the mobile people seeking flats, this governments destruction of the marketplace doesn’t bode well. The lack of rented accommodation is definitely going to cause stress for employers seeking workers. Perhaps a company will buy our flat, they can put new employees into it while they find their feet.


i do not blame you for doing this , more Landlords will follow and this I hope will stitch up the local councils as they have to provide accomodation. Trouble is the taxpayer will foot the bill


More realistically, lack of accomm will inhibit new workers moving into the locality. Didn’t I hear somewhere about a labour shortage?


The authorities and public opinion will interpret rent rises to be a windfall for landlords. That is true but they are a response to legislative / fiscal attack reducing supply. Opponents of the PRS will encourage more punitive taxation as a result. Landlords may be advised to exercise restraint rather than be opportunistic. Poor rental yields in the last 15 years operate across all asset classes due to QE and asset values have increased so returns overall have been ok.

The authorities are likely to react to rent rises by making it tougher for landlords focussing on rent rises rather than the reduction on supply.

The rise in property values in the past is not a reliable indicator due to potential fiscal interventions. If legislation reduces property values this would not be the first time where whole asset classes including ours are impacted by fiscal measures. The historic rise in asset values together with an increase in rental values is more likely to result in fiscal attack.

There is a possibility that the PRS will implode; Each attack reduces the supply. Each reduction in supply increases rents. Each increase in rent is whacked by more fiscal attack. The cycle then repeats itself.

Individual opportunistic behaviour is at odds with the collective interest here.


Sounds like preaching socialism to capitalists. If not that, a cartel?

No I would not as it’s not fair to put rent up during
fixed term.

Reading about this new Renters Reform Bill, I am thinking about selling up. Even its title is utterly biased against landlords. I don’t want to let to people on benefits and my properties are too cheap so it is often people on benefits looking to rent them. Oh well, one less supply…

1 Like

New thread here: Rental Reform White Paper