The proportion of former rental properties moving into the sales market is at its highest on record, indicating more landlords are selling up, some potentially driven by the mooted increase in Capital Gains Tax in next month’s Budget.
The data comes from Rightmove which says that 18% of properties now for sale were previously on the rental market, compared with 8% back in 2010.
Yet despite this, Rightmove insists it’s not a mass exodus.
Tim Bannister, Rightmove’s property expert, says: “We’ve seen over the last few years how the supply and demand imbalance can contribute to rising rents, so there is a worry that without encouragement for landlords to stay in rather than leave the rental sector, it is tenants who will pay the price.
“However, despite the trend of more landlords choosing to sell up, it doesn’t appear to be a mass exodus, and we will need to monitor the longer-term impacts of what happens to the rental supply that is put up for sale.
“For example, these homes could provide first-time buyers with more choice. They might also be purchased by other landlords and put back into the rental market, which would signal a changing of the guard rather than a complete exit from landlords. In any case, we hope the government is considering ways it can support landlords and the private rented sector ahead of the [Budget].”
The hotspot is London, where nearly a third (29%) of homes for sale were previously for rent, followed by Scotland (19%) and the North East (19%).
An agent cited by Rightmove – Marc von Grundherr, director of Benham and Reeves in London – says:“The potential equalising of CGT is, of course, a concern for many landlords. If the Labour government was to follow through with it, it could make for a significant increase in the tax paid by the average landlord when the time did come for them to exit the sector. This would be yet another blow to those who provide vital housing stock that is sorely needed within the rental sector, following a string of legislative changes already introduced in recent years to dent profitability.
“Despite this, we’re simply not seeing the exodus of landlords that is so often reported, as despite such changes, buy-to-let remains a strong investment. It’s certainly one that most take with a very long-term view and they expect ups and downs, but generally speaking, the returns are consistently good.”
The previous five-year average for homes moving from the rental to sales market in Britain is 14%, suggesting – says the portal – that this isn’t a sudden mass exodus of landlords.
The number of new properties coming to the market for sale is now 14% ahead of last year following a post-Bank Rate cut surge, however, there is still no glut of properties for sale. The number of new properties coming to market is a smaller 3% up on this time in 2019.
Rightmove suggests that there needs to be incentives for landlords to stay and continue to invest in the private rented sector to provide a healthy market for tenants.
