Research carried out by the Residential Landlords Association has found that landlords are increasingly considering offloading their properties, as it is no longer economically viable to continue in the buy to let sector. If this happens, the number of available rental properties will fall and rents will rise, which means tenants will find it more difficult to find an affordable home.
The Royal Institute of Chartered Surveyors has issued a dire warning for tenants. It says an imbalance between the supply and demand for rental properties over the next five years could cause a 15% price surge.
A Punitive Tax Regime
Experts are blaming the government’s punitive tax regime, which includes paying extra stamp duty and phasing out mortgage interest tax relief. In addition, the government is now consulting on removing Section 21 notices, which will remove a landlord’s ability to evict a tenant without a valid reason.
“Landlords are losing confidence in their lettings businesses as the government continues to increase the number of regulations with which landlords must comply. This has resulted in increased costs and made it harder for good landlords to stay in business.”
The Rise of Rogue Landlords
As good landlords leave the sector, it creates a vacuum for rogue landlords, who have no problems ignoring legislation and charging tenants a fortune for sub-standard properties.
Rising property prices are prompting landlords to sell up, especially in cities like London where capital gains are much higher than in other areas of the country. London landlords can make around £248k when they sell their properties, but the average windfall for landlords disposing of their properties is £80k, which is not to be sniffed at.
Rising Rents Spell Disaster for Cash-Strapped Tenants
The situation is great for first time buyers. As thousands of cheap properties in affordable areas flood the market, there are rich pickings to be had. But with around 4.5 million people living in the private rental sector, the shrinking numbers of properties is a ticking time bomb. Many lower income families are already struggling to afford their monthly rent so a 15% price rise could spell disaster.
Not all landlords make a profit when they sell. Landlords in South Tyneside and Middlesbrough are more likely to make a loss when they sell.
Are you planning to sell your portfolio this year? Tell us in the comments or connect with us on social media. We’d love to hear your stories!
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