The number of homes for rent in Britain could fall dramatically, as landlords leave the market thanks to higher taxes and more stringent rules.
About a million landlords, more than a third of the total, will review their property holdings in the next year, according to the Nottingham Building Society, and the amount planning to sell homes outnumbers those planning to purchase new ones.
A fifth plan to sell some or all of their portfolio, it said, while 16 per cent plan to purchase more.
While those homes going to first time buyers or families would benefit more people to climb onto or up the property ladder, it could also lead to a deficit of property to rent, and in some popular parts of the country, a shortage of rental homes has lately led to bidding wars.
Meanwhile, a new report by the University of York and the Nationwide Foundation noticed that a huge group of baby boomer landlords were now ageing out of the market and were not being replaced at the same rate by younger landlords due to diminishing returns and more rigorous regulations.
This, it said, could suggest that there will not be enough rental homes to go around in future, particularly for those renters on lower wages or who receive benefits.
It added that across the whole sector, there was a decline of 30 per cent in the amount of buy to let mortgages between 2014-15 and 2018-19.
Both reports noted that tax changes have been one of the principal factors making buy to let less attractive for some.
Previously landlords got tax relief on mortgage interest, but this stopped in April 2020.
There are also new constraints on private residence relief, which decreases the capital gains tax due on homes which people rent out after living in them.
Dr Julie Rugg, the lead author of the report, said that letting property looks altogether different to landlords now and that it seems like a much more precarious proposition, delivering a lower level of return and with a lot more hassle, and as one landlord said to her, stocks and shares may not deliver the same level of return, but they don’t phone her on a Sunday morning because the boiler’s bust.
Julie Rugg also mentioned the regulatory burden which landlords felt they were confronted with thanks to more stringent Government rules on how they managed their tenancies.
Not everyone can afford to buy a house, and now they will be faced with fewer rentals and the price will go up, and it was obvious this was going to happen, and it’s all very well people moaning about landlords purchasing properties, but changing the taxation rules to make it profitless and was always going to cause many of them to sell up, and the people will suffer won’t be the landlords, they’ll put their money into something else. It’s the lower-paid people who can’t get a mortgage who will end up having to pay inflated rents for the properties that are left.
And everything the government does just makes the problem worse, and even the help to buy has stopped the house prices from falling to affordable levels, and it just puts young people in even more debt.
And many landlords are selling their rental properties and putting the proceeds with corporate landlords who are buying into buy to let properties, and of course, they’re charging higher rents to the tenants, but their return on their investment is as good as buy to rent, so why should they worry?