An exodus of landlords from the buy-to-let market has caused a significant drop in rental property listings in recent month with a further net loss anticipated, according to new research.
A fresh study by the Residential Landlords Association’s (RLA) research facility, PEARL, has found that landlord sentiment to the sector and investments is deteriorating, leading to a spike in the number of landlords exiting the rental market.
The trade body estimates that on top of the 46,000 privately rented homes that have already been lost, there will be a further net loss of 133,000 homes to rent, as small-scale private landlords continue to offload properties largely as a result of recent tax and legislative changes, which are making it unviable for many investors to operate in the sector.
Research by RLA PEARL has found that 62% of private landlords have reported that their profitability would be reduced by at least 20% and 67% reported they would minimise investment due to the government tax changes.
The prospect of a rental drought is particularly bad news for tenants, especially those who claim housing benefit/Universal Credit, who are set to continue to face increasing competition for properties and rising rents.
RLA PEARL acknowledged that the growth of the private rented sector over the past 20 years has been driven by the small-scale landlords, which is why the organisation is urging the government to do more to support them, including the introduction of tax incentives, in their quest to provide tenants with longer-term tenancies, and in turn greater security of tenure.
Dr Tom Simcock, who headed up the research for RLA PEARL, concluded: “We need to move to a broader but fair reform of private renting; with improved access to justice for landlords and tenants, expanded options for security of tenure, and reformed taxation policy that supports not penalise private landlords.”