New research commissioned by property development firm Accumulate Capital has revealed how tougher taxes and tighter regulations are driving investors out of the buy-to-let market.
According to the results of a survey of 750 UK property investors, 37% are planning on selling one or more of the residential properties they own in 2020. Of those planning to sell, 61% said this was in response to the greater regulation and higher taxes they now face as BTL investors.
A fifth (21%) said they will instead focus on alternative property investment opportunities, like debt investment and development finance.
The survey also revealed that 72% believe current tax and regulation measures are unfairly weighted against landlords. 69% say the costs of managing their property portfolio have risen “considerably” in the past five years. 53% said they would not have purchased their properties in the first place if they had known how regulated the Private Rented Sector (PRS) was to become.
Over three fifths (63%) said they are not considering new buy-to-let purchases as a result of reforms to the private rented sector (PRS) that will be introduced from 6th April 2020. These include mortgage interest tax relief reforms and changes to private residence relief.
The vast majority (69%) of those surveyed said the costs of managing their property portfolios had increased “considerably” over the last five years. Over half (54%) added that they are prepared to sell properties if further PRS regulation is introduced in the 2020 Budget, scheduled for 11th March.
Overall, 53% of property investors said they would not have purchased their properties in the first place if they had known how regulated the PRS was to become.
Paul Howells, CEO of Accumulate Capital, said: “Property investors are clearly frustrated by how much red tape there now is within the private rental sector and buy-to-let market. Yes, there is a need for regulatory measures to protect the interests of all parties involved in the property market, but as our research shows, some landlords feel the current system is unfairly weighted against them.
“What we might see, as a result, is investors selling properties and downsizing their portfolios. Indeed, a considerable number of investors are now looking to alternative real estate investment options instead, such as development finance – these provide ways to access bricks and mortar investment opportunities without the complications or costs of actually purchasing the asset.”