Property rental market: Has the exodus of the small landlord ended?

Have the changes introduced earlier this year to the property rental market halted the flight of the small landlord? Conor Power reports  

Small landlords are happier in the rental market, and seeking advice from letting agents on new rental rules.

The changes brought in earlier this year were, in part, designed to end the flight of the small landlord from the market.

Traditionally, the great majority of all lettings were owned by so-called “mom-and-pop” property owners – people who may have owned one or two properties outside of their own homes. Many agents feel that there has been little of that phenomenon since the new laws came in.

“I think that in January and February when the new laws were being discussed, a number of landlords got very nervous about what was about to happen and sold then,” says Pauline O’Sullivan of Prime Letting & Management Ltd. “I think that those who were using and agent were a bit better informed of what was happening and tended not to sell. While it might have all sounded a bit daunting to some landlords, it wasn’t.

“The paperwork has hugely increased, but when you have an agent, you don’t feel that.” “We haven’t seen a lot of landlords leaving the market,” says Cormac Aherne of Choices Lettings & Property. “Most of our landlords are in it for the long haul, but I understand that in different parts of the country, there has been a bit of an exodus from the rental sector, but we haven’t seen it in Cork.

“One thing that we’ve seen this year is that the landlords are struggling more than ever with the amount of paperwork they have to deal with, as a result of the latest raft of regulation changes… in the past, we would have had a decent amount of landlords who were operating solo and been able to manage the administrative side of things themselves. Now, the vast majority of them seem to have handed over the keys to letting agents like ourselves. They just can’t keep up with the changes.” 

 “We’re seeing a lot of landlords transferring the management of their properties to us because they don’t want the stress of managing the property or they can’t get tradespeople – they can be difficult to get hold of, whereas we’d have a bank of people we can use. So, we can give landlords and tenants that bit of peace of mind if something happens, then repairs and maintenance can take place quickly.” 

 “My advice for any property owner letting a property today is to favour the right tenant over the money,” says Sonya Irwin of Absolute Property Group. “Choose your tenant wisely over what money can be achieved, because that’s the most important thing going forward. If you’ve a good tenant looking after your property and they have a correct number of people for the property – that the property isn’t overcrowded, for example – then there’s far less wear-and-tear on your property. Whereas if you have a property bringing in a high rent, then it will mean more people living in that property to bring in that rent, but with more people in a place, there’ll be more damage and more wear-and-tear and it generally costs a landlord more in the long run, from our experience.” 

 “Initially, we see a lot of landlords exit the market,” says Orla O’Donovan of Trading Places. “That surge has definitely levelled off now. I was afraid that we were going to continue to see a huge exodus of landlords, but we now have more and more landlords calling to us because of the complexities of the latest legislation… landlords don’t know what to do, so they’re coming to letting agents such as us to seek advice and to look for professional services.” 

 “Our management book has increased over the last 12 months,” says Seán McCarthy, director of ERA Downey McCarthy. “There are a certain number of landlords leaving the market, but there are also more landlords coming into the market and more coming to us for professional management services because of the continuing complexities in legislation.  You’re also getting a lot of people who are buying properties through their pension fund, where it’s a condition that you must appoint an agent to manage the property.” 

 “One of the topics that comes to us quite frequently from landlords is of the tax to be paid,” says Cormac Aherne of Choices Lettings & Property Management.  “They say, ‘yes, the new tenancies are quite high but along with that come very high tax rates. I’ve had two conversations in the last month where landlords have told me that they’d be quite happy to receive a lower amount in rent per month if it meant that I was going to have a lower tax rate… most of our clients are happier with a situation where you have a steady income over ten years, rather than seeing rates go up and down.”