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“The institutionalisation of buy-to-let has slightly Orwellian undertones”

Journalist: Newspage News Desk

ended 30. August 2023

As the financial and regulatory walls close in on amateur landlords, many of whom are being squeezed out of the market, institutional investors are increasingly moving into the private rented sector.

For example, Lloyds plans to become one of the UK's biggest professional residential landlords in the years ahead via its Citra Living brand, while John Lewis has also entered the private rented sector .

But property experts and brokers are divided over whether this transformation of the rental market is a positive.

Imran Khan, co-founder of Canary Wharf-based lettings specialist, 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 the Bristol-based mortgage broker, Self Employed Mortgage Hub, said the institutionalisation of the Private Rented Sector is something favoured by the Government: “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 Mansfield-based Shaw Financial Services: “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 property consultants, Joe Garner Consulting, arrived at much the same conclusion: "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 Norwich-based Yellow Brick Mortgages, also believes smaller landlords are essential for the lettings market to properly function: “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 Alston-based 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."

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6 responses from the Newspage community

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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Many landlords feel they are fighting a war on multiple fronts at the moment, and with a very limited arsenal. Some are just trying to make it out alive on the other side, while others are surrendering and looking to sell their portfolios. There's no doubt banks see property as a good steady investment and an asset they have some influence over the market of, which is potentially a conflict of interest. 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.
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Premium
Graham Cox
Director at Bridging Hub
The current administration are 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.
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Premium
Lewis Shaw
Owner and Mortgage Expert at Shaw Financial Services
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.
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Imran Khan
Co-founder & CEO at PropertyLoop
In a market shifting toward institutional investors such as Lloyds's 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. While build-to-rent schemes are burgeoning, they currently represent a sliver of the market, 77,000 homes out of 28 million. Their rapid growth, however, signals a policy shift, which raises concerns over affordability and accessibility. 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.
Copy

Joe Garner
Founder & Managing Director at Joe Garner Consulting
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.
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Peter Stamford
Mortgage Expert at Stamford Home Finance
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.