Are more landlords selling up? Evidence from the courts
The question of whether landlords are exiting the market is a contentious issue even for official statistics.
As evidence of landlords exiting the market, the Bank of England has identified a moderate decline in the size of the private rented sector over the last few years. Similarly, UK Finance’s 2023 data shows that landlord purchases reduced by 13% year on year suggesting that fewer landlords are entering the sector or expanding their portfolios.
In contrast the English Housing Survey suggests that the private rented sector has been broadly static for years, even growing a little since the pandemic.
So who is right?
What does the possession claim data show?
If landlords are exiting the market, then this is likely to be reflected in the overall possession statistics and the homelessness statistics.
Official homelessness statistics suggest that more people are being served notice because the landlord intends to sell the property. The number of tenants citing landlord sale or re-let as the reason for their tenancy ending has grown from around 6k per quarter in 2018 to around 9.5k in 2023.
The figures do show an increase in possession claims across England and Wales. After years of declining possession claims, accelerated possession claims are now back to their 2016 levels, with around 43,000 accelerated and private landlord possession orders made in 2023.
Wales in particular, saw a significant rise in possession claims, likely due to the Renting Homes (Wales) Act’s introduction. Accelerated possession claims rose by 236% immediately after the act came into force.
However, due to the limited data published by HMCTS and the nature of accelerated possession, it is not possible to identify the grounds for possession used when applying to court in England or Wales.
The Scottish system
This is not the case in Scotland, where the results of hearings are routinely published. Since 2017 in Scotland, new tenancies do not have an equivalent to Section 21 notices, meaning that all private residential tenancy evictions must state the reason for possession.
These possession grounds are broadly similar to the ones proposed under the Renters (Reform) Bill, with grounds available like the landlord wishes to sell or refurbish the property, move a family member in, or the tenant is in serious rent arrears.
Since the coronavirus pandemic, all possession grounds have been discretionary, and it has been up to the Housing Tribunal to decide whether it would be reasonable to grant possession.
The tribunal operates quite differently from the courts in England and Wales. The housing tribunal is inquisitorial, meaning that it takes a more active role in questioning the participants compared to the courts in England or Wales, who are expected to act as impartial arbiters based on the evidence provided by each party.
It should be noted that Scotland also introduced rent controls during the coronavirus pandemic, placing a unique pressure on landlords compared to England or Wales.
The reasons for possession claims in Scotland
As part of the New Deal for Renters consultation, the Scottish Government analysed the different grounds used by landlords when seeking possession under a private residential tenancy between September 2019 and November 2021.
As the table below shows, landlords’ intent to sell was relatively low, with around 20% of claims due to a landlord intending to sell. In contrast, rent arrears was far and away the most common reason for landlords to seek possession.
In 2024 the picture is very different. We manually searched through each case result from the Scottish Tribunal in the period 1 December 2023 to 29 February 2024 to understand why landlords sought possession.
As the data shows, rent arrears is no longer the primary reason for landlords to evict in Scotland. Nearly 50% of landlords who seek possession in Scotland now do so because they intend to sell, more than double the pre-pandemic rates.
Many of these claims specifically cited pressures with mortgage rates and/or ongoing rent arrears as the reason why they intended to sell.
The total number of cases has also grown sharply. At the current rate, possession claims for private residential tenancies are around 50% higher than they were in May-November 2021. This is higher than the figures from 2022/23 which noted a 29% rise in possession claims compared to the pre-pandemic figures.
Interestingly, most of these claims citing the sale ground were not opposed by the tenant and were in fact, often supported by them. A substantial number of tenants stated that they wanted social housing and had been told explicitly by the local authority that they would not be housed until an eviction order had been granted.
In total, tenants in 57% of cases involving the sale grounds were seeking support to find alternative accommodation through their local authority. Most of these tenants explicitly stated that they needed an eviction order to be prioritised for social housing.
A small proportion of rent arrears cases also stated that they had been told to stay put by the local authority. This was because they were not currently eligible for help because of the rent arrears on their existing tenancy. They would however become eligible once an eviction order was granted.
Conclusion
Overall, the data from Scotland indicates that substantially more landlords are intending to sell than before. While mortgage rate rises combined with rent controls were a common reason, it was not the only one. Some landlords cited moving their portfolio to England, others wanted to retire, some felt driven out by persistent arrears.
Given all of these pressures, it is likely that some churn will continue. It is therefore vital that the government looks at ways to incentivise current landlords to expand their portfolios or encourage new entrants to the market if tenants are to continue to a vibrant private rented sector to supply the homes they need.
