Rental reforms will see one in five landlords sell-up

A third of UK landlords believe that rental reforms are currently the greatest threat to the market, with one in five (20%) planning to sell as a result.

That’s the verdict from Simply Business who have surveyed more than 600 buy-to-let landlords as part of their Landlord Report.

It reveals what landlords think about rental reforms, the removal of tax relief and the future of the PRS.

The most startling statistic is that 61% are planning to sell properties this year – with 20% doing so as a direct result of rental reforms.

A further quarter (26%) are selling because of rising costs, whether that’s interest rates, surging energy prices or reduced tax relief.

‘Almost half of landlords have sold a property in the last year’

Alan Thomas, the UK chief executive at Simply Business, said: “Our study found that almost half of landlords have sold a property in the last year or are planning to do so.

“This comes as little surprise when you consider the pace of market change, as well as tax disincentives such as Section 24 and the stamp duty surcharge.

“A buy-to-let exodus would not only remove rental housing at a time when it’s needed more than ever, but it would also significantly reduce the vital £16 billion annual contribution landlords make to the economy.”

He added: “As regulation of the rental sector continues against a backdrop of rising costs, it’s vital that landlords get the necessary government support, education and clarity to rent out high quality homes that are compliant with the law.

“Landlords play a significant role in providing safe and affordable housing for over 4.4 million households across our towns and cities and it’s clear the market is under threat.”

Uncertainty making it difficult for landlords to plan

Changes and uncertainty are also making it difficult for landlords to plan. The Landlord Report reveals that:

• A third (33%) of landlords’ properties are no longer as profitable due to the reduction of buy-to-let mortgage tax relief
• One in five (21%) expect yields to decrease by up to 15% this year
• Just under half (45%) of landlords say rising costs are the most significant threat to the future of the rental market overall
• Half are specifically concerned about further regulation of the rental market, which has the potential to impact profits further when many are barely breaking even.

Help from the government to navigate tax changes

Landlords would like to see more help from the government to navigate tax changes and rising costs.

The study found that nearly a third (29%) said they’d reconsider selling if more tax relief was introduced.

More than a fifth (22%) said more clarity on legislation would discourage them from putting their property on the market.

And, while challenges are causing some landlords to sell up, many are still confident in the long-term prospects of buy-to-let:

• Just under half (45%) still believe that letting out a property is a worthwhile investment
• Well over a third (37%) even expect to see their yield increase by up to 10%
• Overall, 18% are optimistic about their ability to generate an income.