Private landlords help contribute £45 billion to the economy

Private landlords have tended to get a bad press in recent years. Often cast as heartless profiteers, the reality is that most landlords lease properties in good condition and at fair rents. Yes, rents have gone up significantly in recent years. This is hardly surprising, given landlords can no longer claim mortgage interest relief. They also have to deal with extra regulations and red tape, making property management more onerous. And while high inflation has had a negative impact on renters, landlords have seen the value of their money drop as well.

Given this background, it’s heartening to learn of a new report that focuses on the contribution private landlords make to the UK economy. This report, The Economic Contribution of the Private Rented Sector, is essential reading and we summarise some of its key findings in this post.

Where has the report come from?

The new report was commissioned by the NRLA and Paragon Bank. It has been produced by PwC. The report estimates the economic contribution of small- and medium-sized private landlords (with fewer than 15 properties) in England & Wales.

What are the key findings about private landlords?

The report begins by summarising the size of the private rented sector. Currently, private landlords house some 4.8 million people. This is about 1 in 5 households. Of these, private landlords with 15 or fewer properties account for 80% of the sector.

Some of the key findings of the report include:

• Small and medium landlords contribute in the region of £45 billion to the UK economy.
• They also support some 390,000 full- and part-time jobs.
• Of these 129,000 are directly employed in the rental sector.
• The sector supports a further 260,000 jobs via its supply chain and the spending it generates. These jobs include roles in construction, building maintenance, HR & recruitment, public administration and financial services.
• The private rented sector is responsible for about 2% of economic activity for each region in England and Wales.

Why are the findings important?

The report’s findings are important because they allow us to estimate what impact the private rented sector would have on the economy if it expanded or contracted.

It’s well understood that, when landlords sell up, fewer rental properties remain available. In recent years, with the threat of Section 21 eviction abolition, landlords have increasingly sold on their properties. This has left many households homeless and struggling to find new properties to rent.

A shrinking number of properties owned by private landlords could also have a major economic impact. The PwC report estimates that, if the private rented sector contracted by 10%, it would take £4.5 billion out of the economy and lead to the loss of 39,000 jobs.

On the other hand, if the sector grew by 10%, it would add an extra £4.5 billion to the economy and create a further 39,000 jobs.

Policy and private landlords

The reports findings are important, given that we are facing a general election. While the Renters (Reform) Bill didn’t make it into law, both the Conservatives and Labour are likely to press ahead with reforms if they make it into government. Indeed, Labour has pledged an immediate ban on Section 21 evictions, along with new legal protections for renters.

Reforming the rental sector is a difficult tightrope to walk. Some reforms are likely to have the effect of pushing private landlords out of the sector. This would reduce the number of rental properties available in an already crowded market. In addition, private landlords exiting the sector would remove billions of pounds from the economy and threaten jobs.

What will happen next depends on who wins the election. But if you’re a landlord, the more help you get making your portfolio profitable, the better. If you’d like a helping hand from our buy-to-let experts, get in touch today or sign up for our Landlord Software Platinum Service.

You can download the report from the NRLA website, here.