A quarter of landlords plan on selling in the next 12 months

A new landlord survey has revealed that new legislation - including the government’s Rental Reforms - was found to be the most common reason for disposal of properties.

Related topics:  Landlords,  Property,  PRS,  Investing
Property | Reporter
17th October 2023
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"A combination of economic uncertainty, changing regulations, and rising costs means there’s no shortage of challenges facing the nation’s landlords in 2023"
- Alan Thomas - Simply Business

A new report has revealed that thousands of landlords are planning to release properties from their portfolios amidst challenging market conditions.

The Simply Business Landlord Report, compiled from the analysis of a survey of 1,455 UK landlords, reveals that despite demand for rental property continues to soar, a quarter of landlords plan on selling an investment property in the next 12 months.

Buy-to-let selling and buying trends

Over the past 12 months, 9% of landlords have released a rental property from their portfolio. The South East, Wales and the South West were revealed as top areas for sales. Conversely, the North West, Scotland and the East of England emerged as the top regions for landlords buying properties across the UK.

Mortgage hikes

Though constantly changing legislation was cited as the most common reason for putting property up for sale, rising costs across the board also proved to be a glaring challenge. 31% of landlords reported an increase in buy-to-let mortgage payments in the past year, with 19% reporting that their mortgage repayments had risen by up to 501%.

Brian, a landlord in Yorkshire, said: "Being a private landlord in the UK has changed greatly over the years we have been doing it. In particular, the introduction of the premium on the stamp duty and the imposition of the new tax calculation based on turnover and not profit. The tax rules are at odds with the norm, and it is the only investment to be taxed in this way.

“There seems to be a distinct lack of forward planning, and I am concerned that as the sector contracts and the market becomes more competitive, we will see more people struggle to find affordable housing.

“Both of my tenants expected me to serve a notice on them to leave as they knew my costs were going to spiral out of control. I was lucky to be able to do something quickly, resulting in me being able to allow my tenants to live in relative security. But going forward if my tenants decide to leave, I will sell the house and never return to the private rental sector again.”

Rental property is still considered a good investment

Despite the current climate, many landlords still consider rental property to be a worthwhile investment, with 50% saying that they would recommend investing in buy-to-let property.

Paul, a landlord in Warrington, said: "We originally invested in property as a long-term savings opportunity. With the current financial situation, we're actually finding that we are using some of the rental income to top up our regular income to help towards childcare and other high ticket expenses, so our property investment has helped us in that regard.

"We were lucky in that we agreed to 5-year fixed rate mortgage terms so still have a few years across all properties to hopefully ride out the interest rate increases.

"I would say that being a landlord is currently a viable financial stream and certainly has its upsides - we have managed our properties and our income stream carefully, and we have broadly seen the fruits of that labour whilst being able to provide safe, comfortable, affordable housing to our tenants.

"Whilst I know that at this moment in time, it is more difficult to operate profitably, I still feel that investing in rental property is a sound decision."

Alan Thomas, UK CEO at Simply Business, comments: "A combination of economic uncertainty, changing regulations, and rising costs means there’s no shortage of challenges facing the nation’s landlords in 2023. The cost of living crisis has affected all corners of society, and the buy-to-let sector is no different.

"Our inaugural UK Landlord Report shows that landlords see rising costs as the single biggest threat to the rental market. An ongoing theme in recent years has been uncertainty, with two-thirds (66 per cent) telling us that constantly changing and confusing government legislation is one of their greatest challenges.

"Insuring more than 300,000 landlords allows us to gain first-hand insight into the integral role they play in the housing market, plus the challenges they’re facing. It’s important that landlords are given the time and information they need to prepare for significant upheaval in the coming years, so they can continue to provide much-needed housing for almost five million households nationwide."

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