Cuts to tax relief and other rule changes are driving out smaller landlords, the latest figures show.
Official HMRC data reveals the number of small buy-to-let landlords dropped last year, owed in part to the latest reduction in tax relief.
According to accountants and business advisors, Moore, the number of buy-to-let landlords with five to nine properties fell to 157,000 last year, down from 159,000 the year before.
Cuts to tax relief and other increases in stamp duty introduced by the government since 2015 have been driving out smaller landlords from the buy-to-let market, as buy-to-let becomes less commercially viable for smaller landlords, with many now paying considerably more tax.
Jonathan Green, partner at Moore, said: “For some small landlords the latest tax relief cuts are likely to be the final straw, pushing them out of the market.”
“Investment by small buy-to-let landlords has helped to improve the quality of rented properties in the UK - driving them out of the market could have a negative impact on tenants.”
“Changes to the tax regime, such as cuts to reliefs and hikes to Stamp Duty Land Tax, will always be felt disproportionately by smaller landlords. Rental profits have been squeezed to the point where buy-to-let no longer makes financial sense for some.”
Green added: “Buy-to-let landlords with smaller portfolios make up a huge part of the rental market. If their numbers continue to fall it could create a supply deficit which may result in higher rents longer term in some areas.
“Larger, more professional landlords, look to be unphased by legislative changes in recent years – bigger margins means these changes can be more easily absorbed.”