The vast majority of landlords intending to quit during the next two years have cited tax and red tape as the main reasons.
That’s according to a report by The Deposit Protection Service.
DPS asked more than 1,200 landlords about their views on the PRS as well as their intentions for their properties and analysed the findings in its report, The Private Rented Sector Review.
Overall, 47% of respondents said they were considering selling some or all of their portfolio (down 2% from 49% in May), said the report.
However the proportion of respondents who said that their decision to sell was directly influenced by changes or proposed changes to legislation or regulation was 89%: up 4% since May this year (85%).
When asked to say how influential each one of the key legislative or regulatory changes behind their decision to sell up were:
- 94% said that proposed reforms to Section 21 evictions were influential: up 5% since May 2024 (89%);
- 91% said the Renters Rights’ Bill — previously the Renters’ (Reform) Bill —was influential in their decision to sell: up 6 percentage points on May 2024 (85%) and an increase of 10% since August 2023 (81%);
- The same proportion (91%) said that capital gains tax changes had influenced their decision, an increase of 8% since May (83%).
Matt Trevett, Managing Director at The DPS says: “The proportion of landlords planning to exit the PRS altogether has remained largely static over the last few years, and the well-publicised shortage of rental properties continues.
“Our report shows that the legislative and taxation landscapes are becoming greater influences on landlords’ thinking, with just under 90% citing laws or tax as a key reason for their intended departure.
“Rising materials costs — which have a direct impact on property maintenance prices — and the cost of buy-to-let mortgages are also affecting respondents’ plans.”
Since May the proportion of landlords looking to sell rental property, who said that their decision took place in the context of less potential return after tax, increased by 4 percentage points from 72% to 76%.
And 30% of landlords who said they intend to sell reported that concerns about declining property values had influenced their decision: up 9% since May this year (21%) but lower than the 40% who expressed the same concern in August 2023.
The organisation’s research found that just under a quarter (24%) of respondents plan to sell all their properties during the next two years, up 4% since May this year (20%) and 2% since August 2023 (22%).
The study also found that 23% of respondents said they were planning to sell just some of their properties: a fall of 6% since May 2024 (29%).
Almost two thirds (61%) of respondents said they had purchased all their properties to specifically use as rentals, while 30% had either inherited the property or had bought it originally as their main home.
Of those questioned, 57% said they owned one or two rentals, with 38% owning between three and 10.
A copy of the report is available here: The Private Rented Sector Review