Tax changes and more stringent mortgage lending conditions will sound the death knell for small buy-to-let landlords, according to Britain’s largest and arguably most controversial private landlord.
Fergus and his wife Judith acquired around 900 homes, but are now in the process of selling their £250m property portfolio, centred in and around Kent, mainly because they believe that tougher lending criteria, with larger deposits and higher rental income requirements, will kill off the market for future buyers.
Wilson believes that next year is likely to be a challenging time for buy-to-let landlords and perhaps even tougher than 2016, following a raft of changes introduced by the government prompting concern that fewer private investors will enter the market, thus restricting the number of homes available in the private rented sector.
The phasing out of mortgage tax relief from April 2017, coupled with the introduction of more stringent buy-to-let mortgage lending conditions as the Prudential Regulation Authority seeks to cool existing lending practices in the sector, will inevitably also push some existing private landlords out of the market.
There has already been a significant fall in the volume of buy-to-let valuation instructions since the introduction of the 3% stamp duty surcharge on additional properties in April and the scrapping of the 10% ‘wear and tear’ tax relief for landlords who rent out furnished homes, with the number of valuations carried out for the buy-to-let sector having fallen by 18.5% over the past 12 months, according to Connells Survey & Valuation.
Wilson, who controversially increased rents across his residential property portfolio by up to 33% last year following the tax relief changes announced by the former chancellor George Osborne, believes that “the days of the small buy-to-let landlord are numbered”.
He told the Guardian: “It will be impossible to achieve in the future what Judith and I achieved. The constraints put on [buy-to-let] by the government will ensure that.”
“Very many landlords are exiting because of restrictive tax conditions due to hit them,” Wilson added.