New data produced by lettings agency Savills gives an indication of how the buy to let sector may be threatened by ownership demographics.
The agency’s research team says many landlords who have been active since buy to let took off in the early 2000s are now nearing or in retirement, which risks limiting the future supply of rental stock..
Some 1,911,000 BTL properties are currently owned by 620,000 landlords aged over 65, with a further 1,982,000 properties owned by landlords aged between 55 and 64.
“While existing tenants will benefit from greater security, a combination of factors means there is a risk that new tenants will have less choice. With fewer properties available, stock is more likely to be let out to tenants who are better paid, and in more secure employment, inadvertently hitting less affluent households unless measures are taken to increase rental supply” according to Savills’ research chief Lucian Cook.
He has also produced figures showing that average net profits for landlords are now at their lowest since 2007, due to the impact of 12 successive increases to the Bank of England base rate exacerbated by restricted tax relief.
Cook continues: “Following a boom period for buy to let landlords, 2023 marks a turning point for Britain’s private rented sector. Between 2014 and 2021, landlords on average were making ‘year 1’ cash profits of 23% of rental income, but successive interest rate hikes have seen this figure plummet to under 4.0 per cent this year.
“The incoming Renters Reform Bill, abolition of the Assured Shorthold Tenancy, and increasing EPC regulations, are expected to add to investors’ caution as landlords now face the prospect of having to invest to bring their properties up to a minimum EPC, further eating into profits
“There is a very real risk that landlords will exit the sector, particularly those with high levels of borrowing, putting increased pressure on a sector where demand significantly outweighs supply in many locations.”
Want to comment on this story? Our focus is on providing a platform for you to share your insights and views and we welcome contributions.
If any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals, then the post may be deleted and the individual immediately banned from posting in future.
Please help us by reporting comments you consider to be unduly offensive so we can review and take action if necessary. Thank you.
.jpg)
%20(002).png)
.png)
Join the conversation
Jump to latest comment and add your reply
It feels much like Since 2019 the government have had a plan to cripple the landlords breadline,
1 Cutting bottom line profits
2- stopping a landlord off set renovations as a tax deductible
3- mortgage allowance slashed
4- aggressive action to get buy to let landlords out of the market
Well you did what you set out to do, now look at the mess you have created
Informing council to buy back the rental stock to you let to DSS , good luck with that
So far I can see 66 % of landlord in the next 6 months selling up
I have 50% of our portfolio landlords selling this month alone.
Didn’t mention the licensing Schemes that has cost me tens of thousands of pounds and on going repetition every 5 years.
Didn’t mention the Elephant in the room Michael Gove making Selective licensing Borough wide which was supposed to be no more than 20% it must be illegal, also the elephant of The Renter’s Reform farce / Private Property Confiscation Bill.
Forgot to mention the one man without a back bone and Accountable to no one the main cause of landlords exit, creating shortage of supply, the high increase in cost of renting and the very deliberate demise of the Private Rental Sector, one man is allowed to do all this and bring the Country to its knees bring back the Tower.
So we are old make sure to torture us to Death to collect the Dead Man’s Tax.
Just wait until EPC C becomes law :(
Oh yes indeed, this will decimate the PRS.
This is not a surprise, the biggest mistake any landlord can make is to ignore time, thinking (or not doing so) they will live forever. I am selling up and this is a part of it, I want to enjoy the capital before it’s too late.
Same here Simon... Otherwise, what's the point of it all. 👍
Every such change will draw the curtains for some while to others it presents an opportunity. I am super active in the market.
Bonus, your not though are you… BOT
How do Savills know how old landlords are?
Who did their 'research team' ask? Where do these figure come from?
The only person who knows about me (apart from HMRC) is my accountant and I don't think anyone asked him. My lettings agent is not Savills. And I don't think my letting agent knows my age - and she doesn't know how many houses I have since I self-manage several and neither of them, nor HMRC, know how long I have owned them. HMRC don't ask that.
So where do Savills get their numbers from?
I was going to say the same, how do they know and where did they get their data from?
Good question. My Ex-agent (thank god) would not have known my age from our paperwork I am sure.
With computers now any info you submit can be trawled and used later. Therefore mortgage applications had and has your date of birth. It would be a simple programme that could process all this data, without your personal details to give an average and hence this article. There are companies that pay for this info and then get paid for working these figures out!
Big brother has been here a long time now for this sort of info.
You are a bright one, aren't you?
This is not a census, it's market research. You don't need to ask every single person, you just need samplings.
Perhaps if you made sure to educate yourself more, instead of going around making everyone aware of your ignorance, you would understand these types of articles better. And what a research is and how is done.
Even in Communist Scotland, age doesn't need to be a barrier to continuing to be a Landlord.
Retired Landlords have more time ( and experience) to deal promptly with issues and manage their properties.
Just use self employed handymen and tradesmen more if you want to wind down a bit and use a good local agent if you want to move more hands off.
A person is only as old as the person he feels!
As far as I can see there are several different types of landlords, just as there are several different types of tenants.
There are the big corporate landlords who charge top price for whatever their style of property happens to be, mainly in big cities. Their tenants must match whatever criteria they have.
At the other end of the spectrum is the retired person with just one BTL which was intended to supplement their pension. If they self manage they can choose who to let to and some will take a very human approach to tenant selection. If they use a letting agent the tenant will usually have to pass the agents criteria.
In between there are private landlords with varying numbers of properties owned either by themselves in their own personal capacity or as a limited company. These are the landlords who tend to house the tenants who don't fully match referencing criteria. The ones who work in non standard employment (self employed, zero hours, gig, agency), people recently arrived from abroad without a UK guarantor, people with a chequered financial history (maybe even a small CCJ), people who don't quite pass affordability referencing. We are the ones who will make an individual judgement and don't have to take a computer says no approach. We are also the sector that are being absolutely screwed with Section 24. Incorporated landlords don't pay it but their mortgage rates are usually higher anyway. The unincorporated ones are being hit hard. If our mortgage payments go up £500 a month we have to charge between £667 and £1000 a month extra rent just to stand still.
For a 40% tax payer it would be £667 as the government would take the first £267 of the increased rent, then give back a 20% interest tax credit (£100). The mortgage lender would want their £500. The one saving grace for tenants of portfolio landlords is that not all the mortgage fixes are likely to end at the same time and the necessary rent increases can be spread across the portfolio, not just heaped on one tenancy. It's still going to be a big increase though if we are going to stay in business. If tenants can't afford to pay and landlords can't justify keeping the properties on wafer thin returns or running at a loss where are all these tenants going to live? A great many of them already fell outside mainstream referencing criteria.
As the article says, we are getting older. One of my son's jointly owns a couple of my properties because 7 years ago he wanted to be a landlord and it seemed like a great idea for him to gradually take over the day to day stuff as we got older. With hindsight it was a big mistake as it has caused him all sorts of problems with extra SDLT when he wanted to buy his own home, having to restrict his hours in his day job to retain his Child Benefit, etc. It was an added complication when he got divorced. He's seen the astronomical amounts of CGT we would have to pay if we sold anything and has pretty much said there must be better ways to invest money. He's right but if his generation has realised BTL is now financially toxic where are tenants going to live? Especially the ones who don't fit standard referencing criteria.
As usual you are quite right and yet again we see the PRS is surely headed for disaster for tenants.
My father carried on letting until he was nearly 90.
Right up until he died he was called to do jobs by very young tenants. That was unpaid work without any tax deductions permitted for his labour. He would always call on the same day or the next day.
During his lifetime he enabled countless people to save to buy their own flats.
Then there was a huge inheritance tax bill which was paid and went to the country for the benefit of the country.
Had the Renters Reform Bill been law, he wouldn't have let. All those people would not have been housed in fully equipped, spacious flats at a very reasonable cost so that they could save to buy flats, none of his unpaid labour vastly improving property would have happened, and there wouldn't have been a huge amount of money given to HMRC when he died.
Ellie,
I got a reply from the NRLA today reference getting them to update the membership to sign the petition about section 21.
They have forwarded to their policy team and also sent me a link to what they are doing about it. It is a link basically to services and discounts..! Not really an inspiring response towards how this will impact all landlords.
I may join Gen Rent or Shelter just because they seem to be up for the fight a bit better than NRLA.
Thank you very much for the update Peter.
It will be interesting to see whether their policy team thinks that landlords have a right to decide whether or not to sign that petition - or whether they would prefer them not to have a means of voicing their opinion on the Renters Reform bill.
Sending you a link to services and discounts was hardly an appropriate response.
Sadly Politicians never appreciate the damage their stupid policies do until the damage can’t be undone.
I am not too surprised by these findings. My portfolio is to provide me with a comfortable retirement, pure and simple.
Robert, it is true the damage will come. By that time, the people who made these stupid policies will have long gone, either passed away or retired.
I am selling 5 of my properties and hop to complete within 15 to 20 months. The first 2 or 3 within 6 months.
I'm doing exactly the same, have sold 2 already and 2 more in next 12 months. I will then re-evaluate. I've written again to my MP, not that it will do any good, but i'd rather make a noise at my disappointment and frustration by this Government.
I am also going to attend a local Reform Party gathering to see what they are all about.
Dark days for Landlord's with mortgages all because of Section 24. In reality rates are still good.
You are hammered with tax for decades never get anything back. Very often the Beneficiaries recipient are life long and never put anything in the pot.
That’s why I think your Pension should be tax free and dead man’s tax should be abolished, just imagine you paid all your
life. Still they are waiting at the Cemetery Gate.
At the very least they should look at property and regionalise it when it comes to inheritance tax. In the north where property is cheaper it works out better. Our children need to pay tax on property which we give them when we've paid extra all our lives just because of where we live.
Needs to be looked at, but of course they won't, too good a gravy train!
Jo very good summary as usual 10 out of 10 for that.
So it seems we have about 4 different categories, although DSS Tenants seems to be missing but we are not allowed to discriminate and must take all, tell that to your big Corporate Landlords see how far you’ll get but pawn them off on us.
I can't see the corporate landlords taking the work shy dss lot, they won't pass affordability checks
Let's face it none of us know for sure what will happen, but so far most of us have been right. The property market is going to become a mess and the rental aspect even more so.
Us so called oldies have been free civil servants to many Governments with housing. Yes we have done it to make ourselves wealthier in our future lives, but by far the majority of us have provided excellent homes and a very good service in maintaining our properties.
This Government should hold it's head in shame for what they are doing for us and consequently I will never vote blue. After letting the motor industry fail in this country I said i'd never vote red again either.
It's a sad state of affairs!!
Please login to comment