Property market predictions for 2023
3 years ago | 1 comments
70,000 BTL landlords exited the PRS this year
11:01 AM, 28th December 2022, 3 years ago
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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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Property market predictions for 2023
Member Since June 2014 - Comments: 1562
11:00 AM, 30th December 2022, About 3 years ago
Reply to the comment left by TrevL at 30/12/2022 – 09:22
The UK population increased by around 250,000 last year, much of that needs private landlords to house them.
Which is compounded by previous years of landlords exiting and population growth.
Member Since December 2022 - Comments: 1
3:58 PM, 30th December 2022, About 3 years ago
Reply to the comment left by Dennis Leverett at 28/12/2022 – 13:05
I absolutely so agree! I actually remember when I was 5 making up sums to solve them because I enjoyed the ‘challenge’. That’s basically why I became a landlord. The same arithmetic skills lead me to know give up. It hasn’t always been easy being a a landlord. Tenants trashing places, evictions etc. I’m not a bad person But leaving this market
Member Since September 2015 - Comments: 1013
8:01 AM, 31st December 2022, About 3 years ago
Reply to the comment left by Dennis Leverett at 28/12/2022 – 13:05
That’s because the consequences are intended, and deliberately so!
The question is ‘What is their end game?’
Member Since November 2022 - Comments: 11
1:17 PM, 31st December 2022, About 3 years ago
Increasingly, I’m dismissing any of these news articles that quote UK wide statistics. The people writing them cherry pick their stats and then try and make claims about people’s reasoning that make no sense to me. The tax data they’re analysing is from last year when property prices were soaring and I could just as easily claim that people were understandably cashing in on their property investments.
6:52 PM, 31st December 2022, About 3 years ago
Reply to the comment left by TrevL at 30/12/2022 – 09:22This is underreporting. They are not seeing houses that are not let because the owner doesn’t want the expense of preparing the property, doesn’t have the time, doesn’t want the hassle, is downsizing rather than selling in one go perhaps as properties become available, or is selling to owner occupiers. It is clear that tenant choice has fallen off a cliff. They are also not using figures from landlords who don’t use accountants.
Member Since April 2017 - Comments: 139
8:42 AM, 1st January 2023, About 3 years ago
Classic ignorance of Legislation and the so called unintended consequence….
They weren’t unintended we all knew what would happen, so in 2015 there were 4.5m rental properties and now today there are only 2.82m
So 1/3 of the properties have been lost in 7 yrs, and as we head to yet more legislation another loss of 300,000 is predicted….
Welcome to the homelessness crisis of 2023 where yet another compassionate government helping people made their lives worse yet again…
With 504,000 migration last year and 10m in 20 years, the obvious failings aren’t rocket science
Member Since January 2020 - Comments: 1102 - Articles: 1
9:27 AM, 1st January 2023, About 3 years ago
Reply to the comment left by Contended Ted at 31/12/2022 – 18:52
The number of properties let is taken from HMRC data so has nothing to do with whether accountants are involved. As you know, the self-assessment pages include a question about how many properties you let.
It is therefore a like-for-like comparison and reliable as far as it goes,
Member Since January 2020 - Comments: 1102 - Articles: 1
9:34 AM, 1st January 2023, About 3 years ago
Reply to the comment left by Mike D at 01/01/2023 – 08:42
2.47 m is the number of private landlords, which has reduced from 2.82m, not the number of properties.
Member Since January 2023 - Comments: 1
2:31 PM, 1st January 2023, About 3 years ago
Looking at reducing my profolio by selling a property each time a tenant move out. With the rent increases, it shouldn’t take long hopefully…