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We’re Staying - no evidence of landlords quitting despite increased red tape

There is no evidence of a mass exodus of landlords from the sector despite the new regulations and slashed tax benefits of recent years. 

That’s the view of the Belvoir lettings agency in its report forecasting trends in the sector in 2022.

Chief executive Dorian Gonsalves says: “The English Housing Survey reveals that buy to let grew significantly between 2002 and 2016, more than doubling in size to 20 per cent, falling slightly to 19 per cent in 2016. The market has remained at this level ever since. 

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“This is a good indication that despite everything thrown at landlords they have not left the sector, although new landlords have been discouraged from purchasing new properties, which means there is inevitably less availability of accommodation for tenants.”

He continues: “In the current market it is more important than ever for landlords to be encouraged to use the services of a reputable, professional property management agent. A good agent will help landlords to secure the best tenants for their property and ensure they keep up to date with changing regulation.”

 

A cross-section survey of franchisees across the Belvoir network reveals that half are experiencing a shortage in all types of properties, from one bed flats up to five-bedroom homes. There is some regional variation, but franchisees in most regions are predicting that there is little indication of any easing in the shortage of available properties.

Gonsalves  predicts that rents will continue to increase at eight to 10 per cent for the rest of this year and will only fall back to previous lower levels of inflation if more landlords are encouraged to bring more properties to the market.

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    It takes time to sell a portfolio of properties without evicting your tenants so it is unlikely that there will be a sudden landslide - but with EPC C due in 2028 we have a sell by date & I for one am working towards that. The fact that BTL stalled and then fell slightly after a decade of growth is, I believe, the proof that we are over the peak & now on the downwards slope. The number of LLs leaving will start to increase as we head towards 2025/8 unless the proposals are changed and I believe it will be a significant number.

    There will continue to be a PRS, but it is going to be smaller, with less choice for those with poor credit or low incomes, and for these people there appears to be no other option than under-the-radar rogue LLs who will no doubt exploit the situation.

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    Tricia you read my mind, it is too early at the moment, S21 is still here and as you say the coming EPC disaster is 3 to 6 years away, more than enough time to sell up, I personally am waiting until 2026 before my sell off starts . They are counting their chickens far to soon !

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    I'm not selling yet either, but then I'm not buying which I would have been.

     
  • Matthew Payne

    Its not plateaued, he's obviously just reading the headlines of the report saying the PRS is still 19%. If you look at the graph and the data behind it, the PRS has shrunk YOY since 2016, the EHS simply round their numbers down to the nearest %, but 19.9% is very different to 19.0% and its the trend that matters meaning the conclusion is incorrect. The facts are the PRS peaked at 2016 and has been shrinking ever since, a shift from signficantly increasing YOY, albeit even then, still at a rate far lower than the population was increasing by.

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    I too believe there won’t be a mass exodus because we are nailed to the cross.
    How do you get off this merry go around if you sell c/gains there to prevent you and if Government sees too many leaving they will raise the barrier namely c/gains from the current special high 28% for LL’s only to 40%. to keep us there to be able to torture us in the future. Of Course it has stopped us investing already which means it will end up stagnation and back to 1960’s sitting Tenants and your property prices half due to loss of control / ownership. Why would I purchase a property for someone else to have as long as they want or walk away while I have no say and responsible for everything, no confidence left you’ll know the consequences of this one.

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    Michael - I do not see myself ' nailed to the cross', i fully accept that my CG liability is a price that needs to be paid but i will not stay in the PRS if i see my ROI as not being viable in the long term, also given how long legislation takes to wind its way through the govt machine there will be enough time to sell if you are a small LL with 1 or 2 properties, one thing i will not be is blackmailed by anyone or any govt. Never going to happen whatever the cost.

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    Like you Simon I accept the CGT. Plus with the personal allowance added it is not 28% of the total profit.

     
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    Statistics only prove, in the main, that which the author wishes to prove. IMO private Landlords are selling and not buying. I complete on my first sale this Friday and I have another one for sale already. Another Landlord whom I personally know has already sold 2 and like me he has one for sale for the new financial year. And a good friend of mine he has sold his last property in UK, apart from his own residence, as he has invested in property in Germany.
    I do not intend to fully exit the market but I do intend to sell property so that I have either very small mortgages or zero mortgages and the principle driver for this is Section 24 for me. With interest rates going up, I will pay the lenders more money and then be taxed on this resulting in less money for me to maintain the property and ultimately have left over from my investment.
    When I speak to estate agents all I hear is that other Landlord's are also getting properties valued in order to sell. This does not mean that others are not buying! But it does make me believe that many Landlords are selling.
    When a tenant gives notice a for sale sign goes up.

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    Ok you are not nailed to the cross but in a snare. Capital gains has to be paid as you rightly say but that ends your investment and finished you as a landlord, you are being forced out of Private Rented Sector its as simple as that.
    I was unfortunate enough to own a house a bit too far away (10 miles) that became difficult to manage with troublesome Tenants so I sold with the intention of buying one closer to home, guess what it doesn’t work when the Capital gains tax, Agents fees and other costs are taken out, there’s not enough left to buy anything.
    So some think as well they can sell their non compliant EPC property and buy one that is, take note not a hope.

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    At least when you pay CGT at 28% you can now plan how to avoid IHT at 40%!!

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    I have been watching the market in my locale since 2015 and S24. I have also regularly been updating our local MP George Freeman of my findings.

    So this week since the formal announcement of plans to abolish S21 I did my own little audit. I drew an area in Rightmove around the area in which I let and searched for 1 to 2 bed houses for sale which is the market I am familiar with. Of those I identified all the properties that were either marked as investors only indicating a tenant in situ or chain free. I then rang round the agents to identify which out of the chain free properties was a rental before being sold. There were 39 1 to 2 bed properties for sale in the area I selected. Of those definitely 14 and possibly another which I think is an ex rental are ex rentals. By my maths that is an approximate 36% of current sales of 1-2 beds in that area were ex rentals.

    I then looked at my local town where most of my rental properties are located. I 2015 there used to be about 5 or 6 properties for rent on average (again 1 to 2 bed) at a going rate of about £615 to £625. Today there was only 1 at a rent of £800. In 2015 very rarely did I see an ex rental come up for sale. OK so this is a snapshot but its real data and not someone elses interpretation of statistics!

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    Wasting your time with George Freeman he's not interested and why should he be ? none of this is going to affect him personally, he's no different to any other MP, in it for himself and in a safe Tory seat .

     
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    Sorry but as I understand it is 28% for 40% tax payers. Personal shares allowance kind of thing is going to be cut according to reports is £2k for dividends, anyway regarding property its not going to help you much.

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    CGT on property is 18% & 28% - selling a house is likely to push many people into the 28% band unless you have no income & a cheap house! It is the worst case scenario for LLs & for many of us we also have 1 or 2 CGT allowances to set against it.

     
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    I forgot to add at least two of those agents commented without being asked specifically that they had Landlords who were currently selling and had plans to sell off more of their portfolios over the next 3 to 4 years. Out of the horses mouth and not a statistic! I wrote again to Mr Freeman yesterday with these findings and also to head of our local district council and the Network of District Councils Sam Chapman Allen who has expressed concerns about the ability of people on low incomes/benefits to find a property to rent. - At the end of the day it is the councils that will be picking up the tab for temporary housing. I will be in touch with them again using Mr Ryan Bourne's article (Public Understanding of Economics at Cato Institute and writer for the Telegraph) where he explains clearly what the consequences of abolishing S21 will be. Clearly there are people who really understand this and are telling the government but there are non so deaf as those who WILL NOT hear!

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    Tricia, I don’t think so pay 28% c/gains now you’ll still pay 40% IHT on the balance, you could give it away now pay the c/gains under the 7 years rule (which is only 4 years they don’t count the first 3 years) so if you die after 3 years you’ll have wasted your money it will come back into your Estate for IHT purposes, (just a layman point of view).

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    IHT doesn't bother me, I won't be paying it, what ever is left after my children have paid the IHT is free money that they haven't had to work for.

     
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    I agree - but I am planning to live another 7 years & give enough money away to avoid as much IHT as possible!

     
    Theodor Cable

    Tricia - What if you live a lot longer? Where will yout money come from?

     
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    Theodor - we are lucky enough to have a decent pension income to live on. If all else fails I shall go and be a burden on my children!

     
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    I have avoided CGT or IHT on about £3 million of equity by buying property in my kids'names when they turned 18, over 25 years ago.

    I initially also avoided 50% plus income tax on the profits but now get the profits and will do so until I choose otherwise.

    I put much of this straight into bank accounts for my grandchildren so also avoiding IHT for my own kids.

    I wasn't clever in planning this. It just seemed a sensible long term approach provided I could trust my kids to co-operate, which so far they have done.

     
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    I don’t see it that way what was all the work, sacrifices and efforts for ?, if we are not worried what happens to it why would we have done it in the first place other than to help our families which is every parents goal / Bank of Mom & Dad. I worked 59 years 7 days a week & still working now harassed by local Authorities what for, paid endless taxes but not for me, if not for family what’s it for, it’s more than my primary needs why do anything.

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    Estate’s over £2m all allowance washed out for Grave Yard purposes very relevant in London.

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    I was told before if I left 4% to a Registered it would save 10% on tax, what kind of corruption is that can anyone verify or is this business all secrets and jump through hoops. I would rather flush it down the pan after what they done to us.

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    Yes I've heard something similar I would want to know a lot about any charity that I left money to, like their accounts their wage bill and who is being paid how much for doing what, most charities that I've come across seem to pay their management far too much lining their own pockets before any money gets anywhere near the cause

     
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    Sir Thomas Moore fund raising for NHS £33m amazing and fantastic, now question been raised about the huge amounts of fee that were charged, there you go.

    Theodor Cable

    And who oversees them? Seems nobody!!!!

     
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    Shelter is a charity - need I say more!

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    I have an agency in Scotland, we have been regulated since 2017, plus the government’s taxes etc. we have definitely noticed a large amount of property sales by landlords, when a property becomes empty they are saying just sell, trying to evict a tenant here is a nightmare, council tell them to stay put after their notice has run out, housing tribunal takes months it’s so backlogged, regulations galore. The new building regs are also a nightmare so landlords who previously bought to convert aren’t doing that now either. applications to rent have gone from one tenant to average of six per property, there’s no properties available and they’re trying to bring in more new regulations, again heavily weighted against the landlord.

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