Landlords twice as likely to sell than buy
Private landlords are more than twice as likely to sell properties than they are to purchase them, reflecting the difficult conditions investors are operating in.
In the second quarter of 2023 over one in 10 (12%) of landlords in England and Wales sold properties, while only 5% purchased homes during this same period, findings published by research consultancy BVA-BDRC revealed.
Conditions like the loss of mortgage tax relief, which was replaced by a 20% tax credit, has affected profitability, and then there are more recent factors like rising mortgage costs.
Over a third (37%) of landlords plan to cut the number of properties they let over the coming year, meaning that the proportion of landlords who plan to downsize their portfolio is at an all-time high, research commissioned by the National Residential Landlords Association (NRLA) found.
Only 8% want to increase the number of properties they let in the market.
Ben Beadle, chief executive of the National Residential Landlords Association, said: “Whilst the Chancellor has developed a mortgage charter to help homeowners, the lack of assistance for renters and their landlords is clear for all to see.
“Households renting privately are facing the full force of the supply crisis, and change is needed now to prevent the situation from worsening over the next twelve months.
“The government must reverse its damaging tax hikes on the sector. It is frankly absurd to have a tax system that punishes landlords for providing the homes tenants so desperately need whilst favouring holiday lets.”
The loss of rental properties comes despite strong demand from tenants. Two-thirds (67%) of landlords polled reported that tenant demand had increased in the second quarter of the year – another all-time high.
Amidst growing mortgage costs and ongoing uncertainty about proposed reforms for the PRS, the NRLA warns that the supply crisis will only deepen without urgent action from the government.
It called for ministers to scrap tax changes which deliberately seek to deter landlords from investing in desperately needed private rented accommodation.
This includes the 3% stamp duty levy on the purchase of homes to rent out, as well as the decision to restrict mortgage interest relief on long term homes to rent.