A lettings trade body says 380,000 landlords may be about to sell at least one property - potentially flooding the sales market.
The National Landlords Association says this is 19 per cent of all landlords; of that number, almost half say that within a year they are likely to sell a flat and another third likely to sell a terraced house.
Both these property types are typical first time buyer homes and the NLA says this is good news for that sector of purchaser - even if the glut may not help keep prices buoyant.
Significantly, just seven per cent of landlords who plan to sell say they intend to sell to other landlords.
Richard Lambert, NLA chief executive, says: “These findings sound like positive news for potential new homeowners, but the reality is not everyone wants, or is in a position financially, to buy.
“In fact, if all these homes are sold as planned then it will lead to a significant fall in the supply of property available to those who choose to rent, or have no other option but to rent”.
The association says it has been looking into the issue recently and has produced a video and discussion paper – called The Hustle For Homes – about the relationship between landlords and first time buyers in the market.
“Everyone seems to have a gut instinct about the extent to which they feel landlords and first time buyers compete for homes in the UK, but homeownership is a highly emotive issue so the facts are often overlooked” says Lambert.
“There’s certainly no denying that competition exists, but the significant barriers to homeownership are more likely to be the high cost of a deposit or ability to access mortgage finance.”
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Why aren’t agents selling property management services to these landlords? I’m guessing a number are selling because they are concerned about regulation and hassle.
Landlords are selling because of several reasons. Yes increased regulation is one. But the main reason is Section 24 of the Finance Act which takes away the ability of landlords to deduct the legitimate expense of mortgage interest and replaced it with a tax credit. This in cases of landlords who are in the 40% tax bracket means them paying double what they are paying now. And agents ARE selling landlords property management services but if a property is actually losing them money in terms of cashflow then they will cut their losses and go. Rental stock is plummeting and rents are rising due in the most part to Section 24. See https://www.facebook.com/clause24/
This is exactly what happened to me and mine when we married forty years ago. Financially it hurt like hell - having to buy a house that is. Nothing to rent and we had to sell our souls to the financial people to buy a small house that we did not really want. Thanks to Harold and his labour acolytes for that one. Lots of fantastic theories to get votes back then.
The next step will be to put up interest rates at regular intervals to see how much today's poor small houseowners can stand. Last time it was 18% p.a. but it was truly amazing how fast the new Tory government sorted that out when the realisation hit that the country had come to a stop with people absolutely KO'd financially. The answers then were two fold. Cut the interest rates and bring in section 21 to get landlords back in charge of their properties.
We are not quite there yet but we are about to abandon section 21 which is going to stop letting and flood the market with cheap houses which will provide the opportunity for banks to put up mortgage rates and there we go again.
There is one difference now and that is the massive taxation load we all pay connected to the massive cost of old age which has to be supported. I know my supposed baby boomer wealth will drop like a stone as the current property market crashes and at seventy years old there is no way I will be going back to work.
Can I add that I have never paid a penny of higher rate of income tax so those changes to property tax relief make no difference to me. I think the people who are going to be hurt are the ones who pushed their luck too far with leverage.
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