Mar

Nearly half of private landlords prepared to “throw in the towel”

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Landlord Exodus:

Nearly half (48%) of
private residential landlords have indicated that they plan to exit
the buy-to-let market, that’s according to the findings of a recent
survey by Aldermore Bank.. This could be in protest at a punitive
taxation regime and government plans for increased regulation of the
industry, with more tenant-friendly legislation planned.

Recent events are
only likely to have strengthened their resolve as demands increase to
give tenants “rent holidays” if they are unable to pay, due to
the spread of the coronavirus crisis. The research carried out by the
challenger bank suggests that many small-scale landlords have simply
had enough.

The government’s
policy of reversing the rising trend of buy-to-let in favour of home
ownership among the young, and a drive to encourage institutional
investment with build-to-rent, is making small-scale landlords feel
decidedly unloved. Institutional investors in professionally managed
large blocks of flats, receiving tax incentives, will pose a real
challenge to the traditional buy-to-let sector.

The sector has
recently been inundated with change: the imposition of a 3% stamp
duty premium on rental and second properties; the phased removal of
mortgage interest relief; a letting fees ban; restriction on
deposits; and this coupled with new energy efficiency and home safety
standards; the imminent introduction of electrical safety checks;
and the threatened removal of section 21, to name a few, have just
been piling up as a massive burden and extras costs.

According to the
bank survey, landlords see the burden of regulatory changes as the
biggest threat to their livelihoods, followed by the tax burden and
the additional costs associated with bringing properties up to the
latest energy efficiency and electrical safety standards, not to
mention many of the other measures.

The horrendous
complexity involved in managing and meeting the more than 150 rules
and regulations now affecting lettings, some carrying substantial
fines and even criminal penalties, is simply daunting for many, and
turning – particularly part-time landlords – off the occupation.
Something like 70% of landlords own just one or two rental
properties.

Responsible
landlords see the changes hitting them hard, when the real target of
many of these measures is missing the target altogether; the rogues
are still getting away with renting out substandard and dangerous
properties, with the result that all landlords are seen as bad in the
eyes of the media and the public.

However, every cloud
has a silver lining, and with the majority, admittedly by a slim
margin (52%) still see the sector as a good place to invest. And with
good management they can see opportunities for further investment and
growth as others leave the sector.

Aldermore’s
managing director of retail finance, Damian Thompson has said:

“Private landlords
exiting the UK market would mean less choice and likely impact
negatively the quality of rental properties for tenants.

“The number of
people renting in the UK has been rapidly growing, up 1.7 million in
ten years, so it is vital there is enough rental supply to meet this
demand.

“Landlords will
need support and advice on how to manage their portfolios going
forward from lenders and the wider industry so they can continue to
support the private rented sector the way it needs to be.”

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