As we approach what is commonly the busiest month of the year, there is one question many in the sector many will be asking: Is it time for landlords to cash out?

I believe many smaller landlords with portfolios of 10 or less will indeed begin to sell off, perhaps slowly, as property becomes vacant and to take make the most of annual tax breaks.

Not all property will return to owner-occupiers – larger landlords will continue to acquire new property. However, we may see those with very large portfolios begin a sell-off to spread their risks in uncertain times.

In the past 12 months we have witnessed many larger high-profile letting agents swallowing up their smaller competitors with a host of mergers and acquisitions. 

We are now seeing many landlords, especially smaller ones, exiting the market. 

Why? 

Some believe we are at the ‘top of the market’ and are cashing in. Others have been burned by Covid assistance given to tenants where they were not paid rent and couldn’t get possession either. Courts are still very slow meaning proceedings can take months and months and this is impacting their business.

Another big issue that will impact the sector will be EPC regulations. The rules look set to change and properties must reach a ‘C’ in just two years – which is not always easy for old property stock and it’s likely to be expensive.

EPCs are a lot more relevant now and it is important to be mindful about their impact on the market. Anecdotal reports suggest that tenants are now much more concerned with the EPC Rating  because unlike buyers, upgrades aren’t within their control.

Insulation is the easiest way to improve an EPC rating. However, it can also cause issues such as damp/condensation in certain properties so we’ll soon see increased housing defects in the rush to insulate.

The tenant fee ban has pushed up fees to landlords and the recent mergers have reduced competition on many High Streets.

A lot of attention right now is being focused on house prices and how much longer they will continue to rise. The mass return to work, the rush to buy at low fixed rates and the usual post-Christmas bounce all fuelled the market to reach never-before-seen highs in the past three months.

I believe it’s now very possible that the market has hit its peak and it won’t rise much beyond that level. 

The biggest issue the market faces is the cost of living crisis. And this crisis is only set to get more acute in April when fuel bills will increase for many by 40 per cent and more.

This will have a particularly big impact on the housing market. The knock on effect will be increased costs in everything we buy, not just what we use to light and heat our homes. The prices of other household items and bills will rise – and rise, and rise – this year. This will mean buyers increasingly begin to factor in the increased cost and try to adjust their budgets accordingly.

There is already evidence that lenders have begun to look more closely at a borrower’s current and projected spending and we may begin to see multiples reduce.

The tragedy unfolding in Ukraine can also not be overlooked and it will only amplify the problems here. Compared to what is happening there that seems insignificant. Yet a healthy property market provides billions in tax revenue, much needed post-Covid and to pay for whatever lies ahead on the world stage.

The shortage of homes continues. Some sellers are still holding property waiting for prices to increase.

Overall the outlook, for many, will be good as more property becomes available to buy, but longer term choice for tenants will become ever more restricted. Letting agents will be fighting ever harder to win a share of the market from a shrinking number of landlords.

* Jonathan Rolande is a director of House Buy Fast *