Buy to let landlords around the UK are set to sell up over the coming years because of tax changes to the sector which makes owning a rental property unprofitable, according to new research.
The survey by estate agency Maskells found that thousands of landlords will find it more difficult to turn a profit from their buy to let investment because of changes to mortgage tax relief and stamp duty as well as the tightening of buy to let lending criteria.
The result is a growth in costs which could see many landlords having to put up rents which would deter potential tenants.
As a result, according to Maskells, the new tax measures could see around 163,000 homes coming onto the market in 2017/18 as a direct result of the changes.
Buy to let properties being sold
This boom in the number of buy to let properties being sold will, in some areas, lead to an oversupply of property for sale which will force prices downwards.
Maskell’s Charles Curran said: “Tinkering by the Government’s may lead to a sell-off in the buy to let market which has provided the housing rental stock the UK depends on.
“The situation is like a slow motion train crash for landlords with buy to let mortgages who are standing on the railway line hoping to time their exit as best they can. This is a high risk game which will leave, undoubtedly, casualties.”
Sharp drop in rental property levels recorded
Meanwhile, there has been a sharp drop in rental property levels in May after a strong market in April, according to Agency Express.
The firm publishes the Property Activity Index which reveals that new listings last month fell by 11.9% and the number of buy to let properties dropped by 11.1%.
That’s the largest monthly fall for the month of May since records began in 2012.
In addition, the Council of Mortgage Lenders says that the buy to let borrowing market also fell sharply in April after landlords rushed to buy properties in a bid to beat the April 1 stamp duty deadline.
Agency Express’s managing director, Stephen Watson, said: “The index shows a drop in May’s figures but we’ve seen a greater fall than in previous years. The unseasonal rush in activity in March, followed by a dip in April and reduced lending has blurred these figures. With the EU referendum it could be some time before a more balanced view of the lettings market in the UK is seen.”
