Nearly a million landlords plan to review their buy to let portfolios over the next two years, with the number planning to sell outnumbering those planning to buy more properties. This is according to new research from the Nottingham Building Society.
Its study found nearly two out of five landlords surveyed will be reviewing their portfolios with 20% selling all or some of their portfolio.
Regulatory issues are the biggest reason for landlords wanting to sell, with more than half of would-be sellers interviewed blaming increasing regulation in the sector, while 24% say the end of tax relief on buy to let mortgages is driving them to sell.
Meanwhile, the survey found that millions of people are planning to become landlords in the coming five years.
It is concerning that with regulations for landlords becoming ever more complex and with councils becoming so aggressive in housing enforcement (because it’s a massive revenue generator for their budgets), so many inexperienced people are planning to become landlords.
We are called upon every day to assist non-rogue but, shall we say amateur, landlords whom the councils target as ‘low-hanging fruit’ and issue £10,000s to £100,00s of civil penalty fines – often whilst leaving tenants in danger while bullying enforcement officers simply pursue the revenue.
Around 61% say low-interest rates for savings mean property is a better investment. Obviously they don’t factor in, because they don’t understand, the ever-growing risk to their investment of regulatory fines.
Tax changes in the buy-to-let sector have been one of the main factors making buy-to-let less attractive for some, including the scrapping of tax relief on mortgage expenses – previously landlords could offset mortgage costs against rental income – and restrictions on Private Residence Relief which reduced the Capital Gains Tax due on homes which people rented out after living in them.
Some 11% of people surveyed with mortgages on their homes or who own them outright are thinking of becoming landlords in the next five years.
Their main reason for potentially investing in buy-to-lets is the low rates available on cash savings – more than half say they want to put their cash into property to earn a better return while 48% see buy to let as a good way to diversify their investments and 42% are confident BTL will generate a good income.
Anyone planning to enter into property needs to undertake Landlord Accreditation Training as the bare minimum before they start. They should also take compliance advice from independent specialists such as ourselves as talking to the council immediately puts a landlord on their enforcement ‘revenue prospects’ list to be asset-stripped in future.