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TODAY'S OTHER NEWS

BTL landlords selling up in droves, says Belvoir

There has been a significant increase in the number of buy-to-let landlords selling up, along with a notable reduction in the volume of people investing in the Private Rental Sector (PRS), according to Belvoir.

The letting agency reports in its Q2 rental index that landlords are exiting the market mainly due to punitive tax changes.

Belvoir’s findings compliment various reports that suggest landlords are leaving the market in large numbers.

According to the latest residential property forecast from the Royal Instituted of Chartered Surveyors (RICS), rents are forecast to see strong growth over the next five years as a consequence of the reduction in the number of new properties available for renting.

The trade body predicts that national rents could rise by as much as 15% between now and mid-2023.

RICS warns that many prospective tenants now face having to bid against each other, pushing rents up in the process, as a result of falling supply caused by a jump in the number of buy-to-let landlords exiting the PRS, due to the government’s draconian tax changes.

Belvoir CEO Dorian Gonsalves commented: “Although government policies such as a loss of mortgage tax relief, and increased stamp duty on second homes is hurting landlords, they still have a choice as to how to invest their money, whereas tenants have little or no choice of where to rent due to a reduction in supply.

“Belvoir’s Q2 rental index revealed just a slight increase in average rental inflation across the UK, with a similar number reporting static rents, but if landlords continue to sell up because their business model in the PRS is being continually attacked, it will undoubtedly result in a further shortage of properties, and inevitable increases in rents, as predicted in the latest RICS report, which stated that rents are likely to rise by 15% over the next five years.”

Concerns about the possibility of mandatory three-year tenancies may also deter people from investing in the BTL sector, and this could genuinely lead to an increase in homelessness, according to Gonsalves.

Although many landlords are not actively against three-year tenancies, Gonsalves pointed out landlords do understandably need reassurance that they can gain possession of their property when needed, and will be “protected against tenants who do not pay their rent, or abuse a property or indulge in anti-social behaviour”.

Belvoir is urging the government to do more in the Autumn Budget to address stock shortages in the UK, by incentivising the new build sector with low maintenance homes through more Help to Buy and Buy to Rent schemes to provide more homes to own.

Gonsalves continued: “Landlords also need rewards and incentives to encourage them to remain in the PRS, such as reversing current tax increases and introducing tax breaks, as well as initiatives such as tax incentives for landlords who buy large properties and turn them into several affordable and low maintenance flats suitable for the rental sector.

“It is anticipated that more landlords will make a decision about whether to retain their portfolio in 2019, when tax bills have been calculated and the true extent of any further erosion to their profits is seen.

“The Autumn Budget is the perfect time for the government to introduce the incentives that landlords who offer good quality properties at a reasonable rent really need.”

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    Step 1 to solving the housing crisis for tenants.... shut down Shelter and Generation Rent, as it is they that are causing many of the problems.

  • Peter David

    Hardly surprising with the incoming nuclear bomb called section 24.

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    Well we didn’t see this coming did we

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    Precisely what government want .. but god knows what their plan is where all these tenants go

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    Could the number of working foreigners leaving the UK due to brexit leave enough rented property to go round?

     
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    I personally think the government are trying to crash the housing market so that renters will be able to buy. Brexit most certainlywill as the confidence in the UK drops through the floor due to our incompetent politicians. If I were thinking of making money on my personal house by selling (actually which is where I've made most of my money in the past buying and selling the family home) I would have it on the market now!
    I think over the next 5-10 years buy to lets are going to have a real tough ride and could cost the smaller investors everything they own.
    I'm currently renovating properties for the future.. Each time I see the end, another legislation rasies its ugly head and my renovatios continue. It's crossed my mind more than once to dump the lot in auction and go buy gold.

     
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    And who are all these landlords selling their properties to? If it's other BTL landlords, rental supply isn't affected. If it's home owners, good because many renters would prefer to own their own homes. This article doesn't get to the nub of it. Unless the properties themselves are somehow disappearing off the face of the earth, there isn't a supply problem.

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    Buy to let landlords are in the main not buying due mainly to s24 and PRA mortgage rules. I sold 3 this year all to owner occupiers who are supported by government. The s24 tax bills haven’t hit the mat yet that’s when u will see the mass sell of escalate. That’s when I’m certain areas there will be over supply and empty houses sticking on the market which helps noneone. Don’t be fooled this government are trying to destroy the PRS I have a sizeable portfolio and have incorporated and restructure but it has been expensive and stressful.

     
    Peter David

    You might ask why renters are renting. Some will never ever get mortgage. Some never ever want a mortgage. Many any younger people in transit as it were before they settle down to buy. Some are old and can't nor want to get a mortgage. And among the above we have some who are renting for while to see if they like an area. I have a double digit portfolio and 90 percent are extremely happy to rent. I look after every thing and the business runs extremely smoothly, with most tenants happy to stay on. And a tiny number move out to purchase their own. Phillip Hammond's slew of anti PRS legislation culminating in the ungodly horror that is section 24 is basically a pig blowing the houses down.

     
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    more likely over mortgaged small time landlords selling to professional landlords with cash in their pockets , still if it's pushing rents up for the rest of us then that's fine by me.

  • Peter David

    Re rents. Ours are now cranking up to help bolster against the new tax and they'll keep going up and up until we hit breaking point. We may need to liquidate a number of properties and of course, this won't increase the number of houses available, it just changes the ownership. If the whole PRS sector is vapourised, then those who cannot get a mortgage will have to build tent cities like in California. Except they won't have the weather. And there's zero council stock. So good luck to tenants. How it is that tenants are not aware of this unfolding scenario is quite a mystery to me.

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    Landlords will get the blame for putting families out .. government will spin that one easy into a bit of landlord bashing

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    clear your mortgages?

  • Tony Egan

    It's very strange that the Government are financially penalising landlords from many angles but don't actually have a solution.
    There are a lot of studio and 1 bed flats for sale in my area, prices coming down and no first time buyers buying them...or landlords now!
    I believe we're creating a 'must have for nothing' society but the 'must haves' haven't thought about how it's all going to work.
    A bigger housing problem is being caused by forcing out the PRS.

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