70,000 BTL landlords exited the PRS this year

70,000 BTL landlords exited the PRS this year

11:01 AM, 28th December 2022, About a month ago 19

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An accountancy firm says that 70,000 buy-to-let landlords have exited the UK’s rental market over the last 12 months.

UHY Hacker Young analysed HMRC data and reveals that the UK’s 2.82 million landlords in 2021 have now fallen to 2.75 million.

That means the rental market lost 116,000 buy-to-let properties and tenants saw rents rocketing.

The firm also says that the big reason for landlords exiting the market is down to the substantial tax increases they have had to endure in recent years.

Could deduct their finance costs

Previously, landlords could deduct their finance costs, such as mortgage interest, to lower their income tax bill.

That rule was changed in 2017 and the claimable amount was tapered to end completely in 2020.

The result was that most landlords paid tax on their property income – and growing numbers found they were pushed into a higher tax bracket and then made a loss as a result.

The tax landscape also saw the ending of landlords claiming ‘wear and tear’ expenses from rental income.

Landlords also saw a reduction in private residence relief in 2020 which pushed up their Capital Gains Tax bill when selling a rental property that was previously their main home.

Put some landlords off from investing

In addition, landlords also pay a 3% Stamp Duty surcharge which has put some landlords off from investing – and prevented new ones from entering the PRS.

A UHY Hacker Young spokesperson said: “We have seen an increasing number of landlords selling off or reducing their portfolios over the past year.

“Less favourable tax treatment has encouraged this exit from the sector, as well as dissuading newcomers from entering the market.”

‘Driving landlords out of the market’

They added: “Reducing the number of properties for rent by driving landlords out of the market doesn’t benefit tenants as it adds to the upward momentum on rents.

“The decrease in available properties has led to increased competition amongst renters.

“Landlords who have managed to stay in the market have benefitted from rising rents as a result of this excess of demand over supply.”

In the UK, rents have risen by 15.2% over the last five years, says the Office for National Statistics, and Rightmove says that rents will continue rising in 2023 – especially in London with demand from tenants rocketing.


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Comments

Martin Roberts

11:37 AM, 28th December 2022, About a month ago

Government policy working, then.

Dennis Leverett

13:05 PM, 28th December 2022, About a month ago

It never ceases to amaze me how basically stupid those that run our country really are. A 5 year old child could do better at working out the sums and consequences. I wonder if Rishi is allowed to write off his new no. 10 refurb against tax as he supposedly financed it himself. All the £billions of waste now coming out and who pays for it, we do of course. Rant over.

Monty Bodkin

13:47 PM, 28th December 2022, About a month ago

Not to mention the recent reams of tenancy legislation that benefits no one but activist lawyers, career politicians and anti-landlord charities.

Seething Landlord

14:09 PM, 28th December 2022, About a month ago

The figure of 116000 properties lost to the PRS is based upon the number of properties declared by private landlords on their self assessment tax returns.

The missing statistic is how many of these are now owned by the 47400 new BTL companies formed in 2021 and are therefore still available to rent.

Similarly, the number of landlords who have left the market needs to be reduced by the number of new companies which results in a net loss of 22600 and is far less dramatic.

Monty Bodkin

14:49 PM, 28th December 2022, About a month ago

https://www.theguardian.com/society/2022/dec/01/soaring-rents-making-life-unaffordable-for-private-uk-tenants-research-shows

“According to Zoopla, the demand for private rented housing is up 142% so far this year compared to the five-year average,” Norris said. “In stark contrast, the supply of such housing has fallen by 46%."

Contended Ted

22:09 PM, 28th December 2022, About a month ago

Reply to the comment left by Martin Roberts at 28/12/2022 - 11:37”Working” is not normally a term applied to government policy. I am still puzzling about why. Why would a government that pays housing benefit drive up prices and suppress supply?

Dennis Leverett

9:42 AM, 29th December 2022, About a month ago

Reply to the comment left by Contended Ted at 28/12/2022 - 22:09
Simples, its us tax payers that pay housing benefit, not the Govt.. They force prices up because of some self interest involved such as being landlords themselves through carefully hidden networks, chummies etc. The best way to make money is to create a demand, basic economics and who better than the Govt. Good example diesel engined cars, had a good run on them, I fell for it, now caning us on cost of diesel because initial findings were "wrong" ha ha. Same happening to electric cars already.

Seething Landlord

11:39 AM, 29th December 2022, About a month ago

The words most feared by anyone in business: "I am from the government and have come to help you".

Farrukh Anis

16:27 PM, 29th December 2022, About a month ago

We are on the way to the third world countries pattern, where the wealth belongs to the rich only, putting the tax on private landlord force them to exit from industry or increase the rental, which only benefits to the big companies, since they are exempted from the tax on the interest, this way the rental value increased and blamed to the private landlords, on top of that the tax band for the private landlord is higher then the companies, the rule should be same for companies and private landlord to pay the taxes, the private landlord helps the economy in several ways, they use letting agents to manage the property which help other people to make their living, and the money curculate in the hand of our own people, they also help good tanents to keep the low rent and stay in the same property, because 80% of the private landlords buy the second property for their pension after retirement, which still support the economy as a tax payer of the rental property even after retirement, then the inheritance tax , if their children take over the property they pay tax on the transfer of ownership, whilst the rich big companies just add or resigned the director and transfer for free, government either apply the same tax band for the companies on their rental and the inheritance tax on adding the director and same capital gain tax on resigning the director , I would love to see if big companies also stay in the market, this is totally unfair with the private landlords on their hard working of life time.

TrevL

9:22 AM, 30th December 2022, About a month ago

116,000 out of 2.82 million isn't that much but might represent the smart money leaving the sector. Maybe this year there will be more?

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