The Shift Away from Private Landlords to Large Corporate Landlords in the Private Rental Sector

A worrying trend for individual private landlords is the increasing Government policy shift towards the private rental sector towards larger corporate landlords. Lord Nelson once described the British as a nation of shop keepers. Well looking at the number of small retailers that have gone out of business during the current down-turn, that may well be a little optimistic.

However, over the last decade with the buy-to-let initiative we have seen a revolution amongst the private rental sector. Latest government statistics suggest that there could be up to a million UK landlords. Therefore maybe Nelson would have been more accurate to describe us as a nation of landlords, however more and more Government policy is steering the private rental sector towards large corporate landlords.

Nelson once described the British as a nation of shop keepers. Well looking at the number of small retailers that have gone out of business during the current down-turn, that may well be a little optimistic.

However, over the last decade with the buy-to-let initiative we have seen a revolution amongst the private rental sector. Latest government statistics suggest that there could be up to a million UK landlords. Therefore maybe Nelson would have been more accurate to describe us as a nation of landlords.

Historically, renting out property has been the preserve of the small landlord, who has rented out one or a couple of properties as a way of supplementing other income and providing for their long-term future.

Big boys to enter the rental market.

However there are several developments in the private rental sector that could undermine this along with the fortunes of the small landlord.

Firstly proposals by the Government could result in a "Tesco-isation" of the rental market with big companies coming to dominate rental property markets and squeezing out small landlords.

The Government aims to attract large financial institutions such as pension funds to invest in the private rental sector in a bid to boost the housing market and the supply of rental accommodation. The Homes and Communities Agency (HCA) has recently announced an expression of interest for organisations wishing to be involved in their Private Rented Sector Initiative (PRSI) is to create .

Sir Bob Kerslake, chief executive of the Homes and Communities Agency responsible for driving the initiative forward said: "Our initiative is one of many innovations we have used to attract new investment, kick-start stalled housing schemes and mitigate against the effects of the market downturn."

Liz Peace, chief executive of the British Property Federation, said: "This paves the way for a new kind of private renting that could support new development as the housing market recovers and offer the public real quality and choice in private renting, at little or no cost to the taxpayer.

Small landlords could be 'squeezed out'

The concern for many landlords, who have invested their savings in a long term buy-to-let is whether this initiative will ultimately squeeze out small scale landlords who do not have the access to the resources available to large scale institutions. Large scale institutional investment could also increase supply of accommodation and put further pressure on private sector rents.

Larger scale institutions will have better access to cheap funds and loans something that smaller landlords are finding increasingly difficult since the credit crunch.

A recent report about the current state of the buy-to-let property industry by Professor Leyshon of Nottingham University highlighted this fact.

The worry for smaller landlords is that in an effort to encourage institutional investment the Government will introduce an unfair playing field within the private rental sector. The result being that small independent landlords are further disadvantaged and are unable to compete.

Landlords are already struggling after a series of additional regulatory requirements such as the Tenancy Deposit Scheme and now the proposed landlord licence.

I hope, that in their dash to attract the big landlords, the Government don't forget about us small guys; whose thrift, sacrifice and entrepreneurial zeal, mean that almost 12% of living accommodation in the UK is provided at no cost to the taxpayer. It's a shame the same can't be said about our MP's.

Chris writes for the site PropertyHawk which is dedicated to news and advice for landlords as well as free tools such as tenancy agreements, landlord software and specialist products such as landlord insurance.