Property remains a solid gold investment in the UK, as demand outstrips supply, but in the rental sector the government policy of allowing tenants to forget about paying rent since March 2020 is now coming home to roost. Maybe the plan was to persuade small BTL landlords to exit the market so the big Housing Trusts and landowners can move in all along?
Here’s the news;
Nearly a million landlords plan to review their buy-to-let portfolios over the next two years with the number planning to sell outnumbering those planning to buy more properties, new research from the Nottingham Building Society suggests.
Its study found nearly two out of five landlords (36%) surveyed will be reviewing their portfolios – the equivalent nationally of around one million landlords – with 20% selling all or some of their portfolio, whilst 16% aim to buy more properties over the next two years. Regulatory issues are the biggest reason for landlords wanting to sell with more than half of would-be sellers interviewed (52%) blaming increasing regulation in the sector while 24% say the end of tax relief on buy-to-let mortgages is driving them to sell.
The ability to earn a good income from buy-to-let is the main reason for landlords adding properties to their portfolios. Some 83% of those landlords interviewed who plan to buy more properties said this is a key reason for doing so, while 57% believe rising property prices make buy-to-lets a good investment. Around 61% say low interest rates for savings mean property is a better investment.
Tax changes in the buy-to-let sector have been one of the main factors making buy-to-let less attractive for some, including the scrapping of tax relief on mortgage expenses – previously landlords could offset mortgage costs against rental income – and restrictions on Private Residence Relief which reduced the Capital Gains Tax due on homes which people rented out after living in them.
But the research from The Nottingham shows millions who have never been landlords plan to buy a property over the next five years. Some 11% of people surveyed with mortgages on their homes or who own them outright are thinking of becoming landlords in the next five years. Their main reason for potentially investing in buy-to-lets is the low rates available on cash savings – more than half (55%) say they want to put their cash into property to earn a better return while 48% see buy-to-let as a good way to diversify their investments and 42% are confident buy-to-let will generate a good income.
Denise Wells, Head of Mortgage Operations at The Nottingham, said: “Our research suggests sellers currently outnumber buyers in the buy-to-let market with regulatory issues and tax changes among the reasons persuading landlords to pull out of the market.
“However, it remains the case that there are potentially strong returns to be earned in the buy-to-let market and we continue to see landlords buying rental properties whilst our research indicates that many more potential landlords are considering going into the market too.
“Whether landlords are buying or selling it is crucial they get the best possible advice on their finances and source the most competitive mortgages.”