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A ‘perfect storm’ is brewing for buy-to-let landlords

News that a growing number of buy-to-let landlords are likely to exit the private rented sector or reduce the size of their property portfolio over the next 12 months due to policy changes comes as little surprise to many people, including a senior property investment specialist.

The findings of a survey by the National Landlords Association (NLA), published last week, shows that 20% of private landlords look set to reduce the number of properties in their portfolio over the next 12 months due a range of anti-landlord policies, especially in relation to new tax legislation.

The introduction of the 3% stamp duty surcharge, the scrapping of the 10% ‘wear and tear’ tax allowance, and the fact that mortgage tax relief is currently being phased out, have prompted concern that there could be a net reduction of private rented properties this year, as more experienced landlords sell rather than buy.

Comment on NLA’s findings, Simon Heawood from Bricklane, the property investment platform, said: “We will see steadily increasing outflows from the buy-to-let market, in favour of a continual consolidation of portfolios around professionalised, large scale landlords, who in turn benefit from scale advantages, tax-efficiencies, and professionalised approaches to investing and driving up tenant service provision.

“A perfect storm is brewing for landlords looking to property simply as a financial asset. Policy makers across the political spectrum are acknowledging that home ownership is valuable because it affords permanence and security, and not just for the financial returns which placated constituents of yesteryear.”

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    so basically the ' flash with no cash boys' who have borrowed far too much will be selling, good, should be some cheap properties to be had in the auction room then.

  • Formula OneFan

    I think the changes are actually good and will get rid of all the over financed people buying a one off property so them can boast to their mates in the pub of their wealth, these guys inflate the market, make it harder for full time investors, and then they all disappear when the bubble bursts, which they created! Yes we all started with just one property, but the changes are good for the long term sustainability of the buy-to-let market.

  • icon

    And a lot of skilled people who bought 20-30 years ago will have achieved their objective of getting a decent pension to compensate endless rounds of redundancy due to asset stripping or increasing shareholder value and seen their pension funds blatently ripped off by professional fund companies. I am one of those people

    Age 40 twenty five years ago means age 75ish now so its time to sell up and dissipate the cash.

    Yes of course a lot are over leveraged and they have been very lucky to get away with it so far. The rest of us have done it sensibly and quite honestly I couldn't care less about the equity. It is no use put in my coffin. In any case the original equity is almost peanuts after inflation. I will do something for my children of course but that will be after any payments I need for the near future.

    If I was starting again I would do things differently. "Things have changed". I can see that and know how to handle it. Unfortunately there is little point. If you are a youngster then go for it.

    Looking at the current tax situation I think UK families will have to take a lot more care of their family structure and finances. Immigrants do this already.

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    biggest pension rip off was by brown

    however the current compulsry pension is also a rip-off


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