Just one in five landlords say their investment has been a profitable one in 2023, with a further one in five admitting that they have lost thousands.
The National Association of Property Buyers (NAPB) have forecast that around 100,000 landlords will quit the market every year between now and 2028 thanks to increased regulatory changes as well as rising buy-to-let rates.
David Hannah, group chairman at Cornerstone Tax, said: “Rent prices are going up because landlords’ costs, particularly as a result of rising interest rates, are increasing. However, this is not the whole picture as there is still a chronic undersupply of housing in the UK in popular locations.
“For example, rent rises in London post pandemic have been as much driven by a lack of available properties as they have been by inflationary pressure.
“The situation has been particularly exacerbated for houses in multiple occupation (HMO) – these are landlords who typically include the costs of energy, heating, and other bills into the rent.
“The soaring increase in energy costs has as a result had to be factored into the rent for these types of properties. Accordingly, rent rises in these types of lets exceed inflation by a considerable margin.”
Landlords are now faced with the government’s costly new EPC targets, which will force landlords to upgrade the energy efficiency of their buy-to-let properties to a rating of ‘C’ in 5 years.
There’s also the demanding nature of handling tenants, as a quarter (24%) of landlords say their biggest mental health strain is managing their tenants.
Hannah added: “In terms of the rental reforms being considered, I am in favour of rogue landlords being driven out of the markets, but there are also good landlords who have bad tenants that need to be considered.
“The most important thing is to balance tenant rights against tenant obligations and ensure that landlords keep some of their authority.
“There are cases in which properties have been damaged and tenants refuse to let their landlord inspect the home, or where rent has not been paid for a considerable period of time, for example.
“I welcome the proposed changes of the renting rules, and agree tenants need protection, but landlords ultimately need rights too. Our study shows that landlords do need help alongside tenants as nearly 1 in 4 say their biggest mental health strain is managing their tenants.
“I think the rental market is filled with uncertainties at the moment, with rising rents making it less attractive from a renter’s standpoint and rising house prices making it less desirable for buy-to-let landlords to grow their portfolios.
“Our research shows that many landlords were not prepared to deal with the current obstacles facing the rental market as 1 in 5 say they became landlords without the sufficient knowledge needed and have lost thousands as a result.”
