A new poll has found that record numbers of landlords are planning to sell off their rented properties.
The poll, commissioned by the National Residential Landlords Association (NRLA), found that 33% of landlords in England and Wales want to reduce the number of properties they rent out – up from 20% a year ago. Just 10% of those polled said they wanted to buy more properties.
This loss of confidence in the private rented sector (PRS) comes despite the record rents on offer. Last month, average monthly asking rents on Rightmove hit £1,190, the highest figure ever recorded. As tenant demand reaches new records, landlords can also afford to be choosy over who they let their homes to, according to industry analysts.
But landlords worry about tax, mortgage and regulatory changes making their investments less profitable and harder to manage even while rents rise. According to the NRLA, two of the biggest factors are Section 24 (which stopped landlords from deducting mortgage interest from their taxes) and fears over reforms to eviction rules. Other factors, such as the plan to require landlords to upgrade their properties to a minimum EPC C, have also pushed some investors out of the sector. And landlords with buy-to-let mortgages are having to pay more as interest rates rise.
Rental sector resilience
It remains to be seen how big the selloff will be. While the Section 24 tax changes put some investors off buy-to-let, the most recent English Housing Survey found that the PRS has grown since 2020, and 2022 was a boom year for buy-to-let lending. However, it is still slightly below its peak in 2016, and the growth of the sector has levelled off since the rapid growth of the early 2000s.
Despite fears over renovation costs, landlords appear to be preparing for life after EPC C: a recent survey found that 80% had invested in improving their EPC ratings, while only 13% were planning to downsize their portfolios.
It’s also important to remember that selling up and cashing in their capital growth is just part of the plan for many landlords. The most recent English Private Landlord Survey found that 40% of landlords were investing for retirement, and that over 30% were aged 65 or older.
But during a shortage, even a small fall in the number of properties to let could be negative for tenants. The private rented sector needs significant new investment to turn that around, not just replacements for retiring landlords.
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