UK’s private rented sector could decline significantly by end of 2017

The private rented sector in the UK could be set to contract in size as property sales by existing landlords are predicted to outstrip purchases by the end of this year, it is suggested.

The warning from the National Landlords Association (NLA) comes at a time when the latest English Housing Survey shows that the private rented sector plays an increasingly significant role, accounting for 20% of the country’s housing mix.

An analysis of members’ property transactions by the NLA shows that net growth, that is property purchases minus sales, has fallen by 63% since former which is due to come into force at the beginning of April.

The research from the NLA shows that the proportion of existing landlords looking to buy properties in the coming year has fallen to its lowest ever point at 16% and the proportion of existing landlords who intend to sell property in the next year has more than doubled since July 2015 from 7% to 16%.

This represents the lowest stated intentions for landlords to invest since the NLA’s quarterly landlord panel began 10 years ago and the NLA is now predicting a net reduction of property transactions by 2018.

‘There has been a clear correlation over the past year between our findings on what landlords have told us they intend to do in terms of buying and selling in the coming year and their actual transaction activity,’ said Richard Lambert, NLA chief executive officer.

‘If the trends keep moving in the same direction then by 2018 we’ll have more experienced landlords selling than buying, contributing to a net reduction of private rented properties,’ he pointed out.

He explained that some new landlords will enter the market to take up the slack, but the progressive removal of mortgage interest from April this year, as well as a 3% stamp duty surcharge on additional property purchases, means it will become increasingly difficult for anyone considering their first steps in the market.

He added that while some might think that a mass exodus of landlords will be a good thing, the reality is that more people now rely on private rented housing than ever before. ‘Absolutely no good can come from fewer homes being available for those who need them most,’ he concluded.

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