A new survey from Britain’s biggest landlord organisation has found that one in five buy-to-let investors are planning to sell their properties in the near future.
Buy-to-let has become an increasingly unattractive method investment, following the housing market’s struggles, new tax rulings and mortgage criteria strengthening.
The Residential Landlord Association, which represents 50,000 private sector landlords, published the data, with it also showing that almost half of these planned to increase rent over the next 12 months.
The effects of the market’s issues, such as low rental yields and high property values, have been felt in London particularly badly according to peer-to-peer company Landbay. Many landlords are turning away from the capital, focussing on areas such as Scotland and Northern England, where demand is stronger.
Data from the Council of Mortgage Lenders adds to this bleak picture, showing that the number of properties purchased by landlords in 2017 has been a severe decline when compared to previous years. Over the first three months of this year, 18,100 mortgaged properties were purchased by landlords, compared to a quarter average of 27,250 in 2014 and 2015.
Analysts say that the government’s decision to change tax legislations is having a greater impact on the situation than any of the other factors, as landlords in the higher-rate tax bracket will no longer be able to offset their mortgage interest against profits. This means they pay income tax on their turnover rather than their profit, which has caused minimal profits and some losses.
There is now also an additional three percentage point stamp duty surcharge applied to any additional home purchases beyond a main residence.
