Landlords are selling close to 4,000 buy-to-let properties a month resulting in the first recorded fall in the number of rental properties in 18 years, fresh figures show.
Official data from the Ministry of Housing report reveals that about 3,800 buy-to-let properties are being sold by landlords each month, as mortgage interest relief changes continue to have a negative impact on the market.
A number of other tax and regulatory changes have also hit landlords’ profits over the past couple of years, including the scrapping of the ‘wear and tear’ allowance and the introduction of the 3% stamp duty surcharge.
David Cox, chief executive of letting agent trade body ARLA Propertymark, said: “The barrage of legislative changes landlords have faced over the past few years has meant the buy-to-let market is becoming increasingly unattractive to investors.
“Landlords are either hiking rents for tenants or choosing to exit the market altogether to avoid facing the increased costs incurred.”
The “exodus of landlords” is causing a chronic shortage of available properties to rent in some parts of the country, particularly in London.
Jatin Ondhia, CEO of Shojin Property Partners, commented: “As a result of the government’s increase in stamp duty, it is now much more costly to acquire a buy-to-let property. A £250,000 investment property will incur stamp duty of £10,000 compared to £2,500 for an owner occupier.
“Many landlords have seen their profits eroded by the increased burden of taxation and regulation. They are also facing poor buy-to-let yields especially in London for example, where they are between just 2-3%, while nationwide the average yields are between 6-8%.”