New rental regulations are pushing a considerable percentage of landlords out of the buy-to-let market, according to research from Together.
Rising taxes and new expenses caused by the Renters’ Rights Bill may be causing landlords with smaller portfolios to sell some of their properties, or exit the market completely, the lender has warned.
Together’s research revealed more than a tenth (12%) of buy-to-let landlords will be offloading properties this year, with 11% planning to exit the market altogether.
Another 8% of buy-to-let landlords admit they don’t foresee any opportunities in the next 12 months and will pause their investment activity and wider property plans.
This is despite UK Finance data showing that the number of buy-to-let mortgages granted in the fourth quarter was up by 39% annually and the total value was up 47%.
When asked what the main drivers were for their exiting the buy-to-let market this year, soon-to-be ex landlords cited three main reasons, 14% pointed to the capital gains tax burden, 12% said rising interest rates were to blame and 8% cited the headaches caused by the Renters Rights Bill as the main reason they were shutting up shop.
However, despite the tenth of landlords planning to reduce their portfolio this year, a third (29%) are planning to expand or diversify.
When asked what they consider the biggest challenges over the next 12 months, 17% of landlords pointed to the rising cost of building materials, 16% cited competition from overseas investors as well as further policy change from the Labour government.
Another 15% consider Stamp Duty increases as among the biggest challenges, and a further 15% feel the same for safety standards.
Ryan Etchells, chief commercial officer at Together, said: “Buy-to-let is a robust market and while the impact of cost pressures and wider regulatory changes is apparent, we are still seeing a healthy proportion of landlords riding out the wave and expanding their portfolios. There will likely be some smaller or amateur landlords who decide to sell off investments or exit completely, but in their position we are already seeing larger, professional landlords stepping in to seize diversified opportunities.
“Until the final outcome of the Renters’ Rights Bill is known, there may be a bit more volatility as landlords assess the cost impact to them and their property plans this year. But, on the whole it’s a changing of the guard rather than a mass exodus. A combination of more flexible regulations and an agile lending sector can help landlords to manage their portfolios and ensure they are able to leverage all available opportunities – something the specialist sector is in a prime position to do.”
