Why Some Landlords Are Leaving the Private Rented Sector – And How You Can Stay Ahead

In the past year, the property market has experienced a significant shift, with nearly 30% of landlords across the UK either selling or listing their rental properties . However, this hasn’t been our experience as a letting agency in Manchester. While some landlords have sold, the figure is much lower for us. Yet, we’ve noticed a trend among prospective tenants who are looking for a new home because their previous landlord has either sold or is planning to sell the property.

This raises an important question for landlords: Why are some leaving the sector, and how can you stay ahead in a challenging market?

The Challenges Facing Landlords in 2024

From rising mortgage rates to new energy efficiency standards, landlords are facing increasing costs that are making it harder to maintain profitable rental portfolios. Here are the key factors contributing to the pressure on landlords:

• Rising Mortgage Rates: In the North West, like much of the UK, many landlords are grappling with higher mortgage repayments. With interest rates climbing from years past, it’s becoming more expensive to hold onto rental properties, particularly for those on variable rates or facing renewal.
• Increased Service Charges and Maintenance Costs: We’ve also heard from landlords dealing with rising service charges, especially in city-centre properties. Whether it’s building insurance, service charge fees, or general maintenance, these costs are adding up.
• Legislative Changes: While legislative reforms, such as the proposed abolition of Section 21, are meant to protect tenants, they are also causing concern among landlords. Many worry about losing control over their properties, and nearly 60% of landlords in the North West say upcoming regulations could impact their decision to stay in the market .

Why Tenants Are Being Affected

We’ve noticed that a growing number of tenants are coming to us because their landlords have sold or are in the process of selling their rental homes. This is particularly true for tenants in long-standing tenancies, where rent levels have stayed below the current market rate. With landlords exiting the market, many tenants are being pushed into a competitive rental landscape, where rents are higher and properties are harder to secure.

How to Stay Ahead: What Successful Landlords Are Doing

While some landlords are choosing to leave the market, others are finding ways to adapt and thrive. If you want to stay ahead, here are some practical strategies:

1. Review Your Finances Regularly - Rising costs are a challenge, but regularly reviewing your portfolio’s performance can help you identify opportunities to save or invest wisely. Consider refinancing options if you’re facing high mortgage repayments, and look for ways to improve energy efficiency ahead of the upcoming EPC Band C requirements. The North West still offers competitive yields compared to other regions, making it a good long-term investment for landlords .
2. Work with a Trusted Letting Agent - Compliance is becoming more complex, and many landlords are choosing to work with letting agents to ensure they meet regulatory requirements. In fact, 63% of landlords in the North West use letting agents, and compliance is cited as a key reason for doing so. Partnering with a professional agency, such as Property Genius, can help you navigate these challenges, reduce stress, and make your rental business more efficient.
3. Maintain Good Relationships with Tenants - Retaining good tenants is more important than ever. With rising demand and fewer properties on the market, keeping reliable tenants in place can save you the cost and hassle of finding new ones. Consider flexible rent increases and make sure your properties are well-maintained. Many tenants are willing to pay slightly more for stability and a well-managed property.
4. Stay Informed About the Market - The rental market is changing rapidly. Stay up to date with local trends, such as the strong demand for rental properties in Manchester and the surrounding areas. Despite the challenges, tenant demand in the North West remains robust, with more than 35% of tenants actively searching for properties compared to other regions. This is a good sign for landlords who can weather the storm and adapt to the evolving market.

Conclusion: Why Now Is Still a Good Time to Be a Landlord in Manchester

While some landlords may be selling due to rising costs, there are still many reasons to stay invested in the private rented sector. With tenant demand remaining high and Manchester continuing to grow as a key rental market, landlords who adapt to the current challenges are well-positioned for success. By keeping a close eye on your finances, working with the right partners, and staying informed about the latest regulations, you can not only survive but thrive in this market.

If you have any questions about how to navigate the current market or want to discuss your rental portfolio, don’t hesitate to get in touch with us here at Property Genius. We’re here to help you stay ahead.