A fifth of landlords plan to sell their buy-to-let properties
Research from the Nottingham Building Society suggests nearly a million landlords plan to review their buy-to-let portfolios, with the number planning to sell outnumbering those planning to buy more properties.
Around a million landlords (36 per cent) said they would be reviewing their portfolios, with 20 per cent selling and 16 per cent buying.
Regulatory issues were the biggest reason for landlords wanting to sell with more than half of would-be sellers (52 per cent) blaming increasing regulation in the sector.
A quarter (24 per cent) said the end of tax relief on buy-to-let mortgages was driving them to sell.
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.
But the research also shows millions who have never been landlords plan to buy a property over the next five years.
Some 11 per cent 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 and diversifying their investments.
Denise Wells, head of mortgage operations at The Nottingham, said: “Our research suggests sellers currently outnumber buyers in the buy-to-let market with regulatory issues and tax changes among the reasons persuading landlords to pull out of the market.
“However, it remains the case that there are potentially strong returns to be earned in the buy-to-let market and we continue to see landlords buying rental properties whilst our research indicates that many more potential landlords are considering going into the market too.”