Official data from the Ministry of Housing report reveals that every month, circa 3,800 buy-to-let properties are being sold by landlords. These figures are the first recorded decline in the number of rental properties in 18 years.
The exodus from the buy to let market has been attributed to a number of tax and regulatory changes that have swallowed up landlords’ profits, such as
mortgage interest relief changes; the scrapping of the ‘wear and tear’ allowance and, the introduction of the 3% stamp duty surcharge.
David Cox, chief executive of letting agent trade body ARLA Propertymark, said: “The barrage of legislative changes landlords have faced over the past few years has meant the buy-to-let market is becoming increasingly unattractive to investors.
“Landlords are either hiking rents for tenants or choosing to exit the market altogether to avoid facing the increased costs incurred.”
Chronic shortage of properties
London has been hit particularly hard, with a 20% drop in the number of properties available to rent over the last 12 months. Over the same period, there has been a 12% fall in the number of available rental properties across the country.
Jatin Ondhia, CEO of Shojin Property Partners, commented: “As a result of the government’s increase in stamp duty, it is now much more costly to acquire a buy-to-let property. A £250,000 investment property will incur stamp duty of £10,000 compared to £2,500 for an owner-occupier.
“Many landlords have seen their profits eroded by the increased burden of taxation and regulation. They are also facing poor buy-to-let yields especially in London for example, where they are between just 2-3%, while nationwide the average yields are between 6-8%.”