Rise in number of landlords selling properties to their tenants, brokers report

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Mortgage brokers around the UK have reported a big rise in tenants being given first refusal to buy their rental property as more amateur landlords head for the exit.

“We are arguably witnessing the start of the great landlord sell-off as buy-to-let becomes a less attractive investment due to tax changes in interest relief, stamp duty land tax and new EPC rules due to hit in 2025,” says Lewis Shaw (pictured), founder of Shaw Financial Services.

He adds: “Over the past six to eight weeks, we’ve seen an enormous uptick in enquires from tenants who have been given first refusal to buy the property they’re renting from their landlord, often with an element of gifted equity.”

Landlords can offload properties more easily and save some cash on the transaction, says Shaw.

“Buy-to-let landlords can sell directly to the tenants to avoid any expensive agents’ fees, not to mention the hassle of getting involved in chains. Moreover, any reduction in price that tenants can use towards their deposit essentially reduces the capital gains tax payable by the landlord on sale.”

Pole position

It’s an increasingly attractive option, agrees Ian Hewett, founder of The Bearded Mortgage Broker, who reports that some tenants are now in a position to borrow thanks to options such as family support mortgages, putting them in pole position if their landlords approach them about a sale.

“However, the knock-on effect of this landlord exodus is going to cause some serious issues going forward given the lack of rental stock available and inflated prices, putting tenants under immense financial pressure at a time when every other bill is soaring,” says Hewett.

Edward Checkley, MD of Advias, generally only sees limited company purchases now for buy-to-let property, with holiday lets being the exception to the rule.

He adds: “With increasing interest rates, lower rental yielding areas will create post-tax losses for many investors, making a sale a highly appealing exit.”

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