War on Landlords causes BTL sales collapse

9th December 2016
"The government is making a conscious decision to put landlords on the block for a property market that isn’t working for first time buyers or Generation Rent"

According to one of the UK's largets independant estate agents, the scale of decline in buy to let in just twelve months is deeply worrying - with many landlords clearly pulling out of the market and are unlikely to return.

The latest report from haart revealed that house prices across England and Wales in November rose by 0.5% on the month, however they are down by 1.7% on the year with the average house price now sitting at £228,635.

New buyer demand for homes fell by 6.3% in November, and continues to be down significantly on the year, by 21.3% annually. Additionally, the number of properties coming onto the market has fallen by 5.5% on the month and by 8.4% on the year. With a decrease in stock the number of buyers chasing each property has risen slightly, as there are now nine buyers for every new property on the market across England and Wales.

The market has become more efficient this month, as the number of transactions has decreased by 3.6%, and the number of viewings have decreased by a further 5.9%, meaning that buyers are choosing to look at fewer properties before they buy.

The average purchase price for first-time-buyers has fallen this month by 2.8%, and is down by 5.9% annually. This comes as the rate at which first-time-buyers enter the market falls by 6% on the month and by a massive 30.9% on the year.

Despite a fall in the average purchase price, the amount first-time-buyers are paying for a deposit has risen by 1.6% on the month and by 1.1% on the year.

The average property price in London has risen again this month, by 6.2%, pushing up annual growth to 9.4%. This contrasts with the -1.7% annual growth seen across the rest of the country. However, price increases in London come as demand for properties falls on the month by 6.7%, and is down 38.9% on the year. At the same time, the number of properties for sale has decreased by 7.9% on the month, and a huge 28.7% on the year. Sale transactions also continued to drop 1.7% on the month and 24% on the year.

The number of tenants entering the market has fallen by 11% on the month, and by 5.2% annually, decreasing the rate of demand. This has reduced rents marginally, as the average rent now sits at £1,331 across the England and Wales. The fall is less severe in London, where demand is down 2.3% on the month, and by 4% annually. The average rent has fallen, and now sits at £1,871.

The number of Landlords registering to buy increased by 2.2% on the month across England and Wales, but have fallen by 0.9% in London. Figures remain significantly down annually across London by 59.2% and across the whole of the country by 47.7%. Sale prices have remained relatively stable, up 0.7% on the month across the country and down by 0.3% in London, however they remain down on the year across the country. Transactions continue to suffer, down 8.2% on the month and 63.7% annually in London, and by 6% month and 40% annually across England and Wales.

Paul Smith, CEO of haart, the UK’s largest independent estate agent, comments: “The scale of decline in buy to let in just twelve months is deeply worrying - landlords have clearly pulled out of the market and are unlikely to return any time soon.

However this is entirely the result of government policy, with Theresa May now picking up George Osborne’s baton and proceeding to bash landlords with renewed vigour. The end of tax relief on mortgages, the 3% stamp duty surcharge, strict new lending criteria, and now a ban on tenant letting fees that will see the costs passed on to owners, the government’s attack on investors adds up to a ‘War on Landlords’ and a buy to let market crippled by tax hikes and unnecessary regulation. The effect has been to more than halve the number of buy to let sales in England and Wales, and the inevitable consequence will be fewer properties available to renters next year and higher rents.

The government is making a conscious decision to put landlords on the block for a property market that isn’t working for first time buyers or Generation Rent. However rather than chasing investors out of the market altogether, a better solution would be to channel their cash into housebuilding and increasing the supply of rental properties. Tenants are stuck in an intensely competitive market where rents are often more expensive than mortgages, because there are simply not enough properties available for lettings, and many landlords now have no choice but to pass the extra costs on to tenants.

It is time for the government to end this damaging ‘War on Landlords’ and instead create a market that genuinely works for everyone. The government is casting landlords as the pantomime villains of the property market, but we need a more grown-up and serious approach to policy-making, as well as a recognition of the contribution that landlords make.”

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