I was surprised to read a study saying a quarter of landlords plan to sell at least one of their properties this year.
Apparently a succession of tax increases, shifts in House in Multiple Occupation licencing, new stipulations on the minimum size of rooms, as well as the banning of admin fees are some of the reasons to blame.
However, I for one feel sceptical about the notion that so many landlords will reduce their portfolios.
Some of the changes, like the room size rules, seem more of a nuisance than anything too seismic.
With regards to the more significant changes, I can understand why investors would be unhappy about alterations like the reduction in mortgage tax relief.
However while it may hit their profits, I wonder if it’s by enough to prompt a big number leaving the market.
Many landlords – especially in London – treat their portfolios as long-term assets where they can profit from substantial capital gains, rather than focusing on short-term income.
And with commentators predicting that the housing market will rebound in 2020, their properties may gain in value next year.
Rents are also predicted to rise next year at a faster rate than 3.5%, so they are likely to still be able to profit from buy-to-let to an extent in the short-term.
If a substantial number of landlords do exit the market – it’s a big ‘if’ in my opinion – the nature of supply and demand could result in rising demand for fewer properties, making them even more valuable assets to hold onto.
Clearly there are alternatives to being a landlord, one being crowdfunding, but I wonder if investors really will pull their money from property or whether they’ll Keep Calm and Carry On.
