From a landlord’s perspective, it has been a tough couple of years, with a raft of changes designed to bring the previously booming housing market under control and create what the former chancellor George Osborne described as a “level playing field” between homeowners and property investors, and the government’s plan appears to be working.
A fresh study undertaken by Simple Landlords Insurance has found that almost a third - 30% - of landlords with just a single property are planning to sell and exit the buy-to-let sector.
Having long provided mega double-digit returns for investors, investment in buy-to-let is starting to look less attractive for less experienced property investors as a consequence of the government’s decision to introduce a number of measures to curb the growth of buy-to-let landlords.
However, more experienced buy-to-let landlords are feeling positive about the future of the rental market, with 38% of those who currently own two properties or more thinking about buying additional homes to rent, according to the research by the insurance provider.
Tom Cooper, director of underwriting at Simple Landlords Insurance, said: “From Section 24 to Right to Rent, increased stamp duty, capital gains tax, regulation and licensing, you’d be forgiven for thinking it was all doom and gloom in the private rented sector. But our evidence shows there are landlords adapting to the changes and emerging like phoenixes from the ashes. We wanted to find out more about them.
“The research reveals it is the landlords positioned at the larger end of the market – or aspiring to get there – who are least fazed by changes, and best poised to take advantage of increasing demand, bargain stock being sold off, and stable house prices.”
The number of accidental landlords is falling, dropping from 18% in 2016 to 15% in 2017, widening the gulf between them and more professional investors.
“Times change. Markets change. But property can still be a way to make money if you change too,” said Carl Agar, founder of the Home Safe Scheme and managing director Big Red House. “There’s a clear difference between the big players and the dabblers, the old school landlords and the new kids on the block.”
He continued: “Your ‘traditional’ landlord is seeing all of these new rules imposed and their returns drop. Meanwhile those new to the market are comparing those returns to what they’d get putting their money into a savings account – and it actually looks pretty good. They’re seeing opportunity, and building the rules, regulations and changes into their business model.
“Personally, I’m looking forward to a more professional and more prosperous private rental sector, driven by a new breed of landlord investor.”