Landlord sales outweigh purchases for first time in 10 years

By Mark Long

This blog was first published on Mortgage Solutions in February 2016.

What impact will the 3% Stamp Duty hike on buy-to-let (BTL) properties taking effect in April have on the private rental sector (PRS)? Our latest panel survey of 1,300 private landlords provides a useful pointer for the industry.

We found:

• For the first time in 10 years, the proportion of landlords planning to divest property exceeds those looking to grow their portfolios in the next 12 months. The vast majority of landlords looking to sell said they were doing so as a direct result of the summer 2015 budget announcements.

• 4 in 10 will change their portfolio management plans as a result of the stamp duty announcement. 3 in 10 will suspend plans to acquire additional property and 1 in 10 will reduce the number of properties they were planning to add.

• 13% of landlords will accelerate their plans to purchase additional investment property to beat the April increased stamp duty deadline. Existing portfolio landlords will be most active. BTL will be the primary funding source for these acquisitions.

• Worryingly for tenants, 6 in 10 will increase rents to recover lost income and 30% will decrease spend on property upkeep to lessen the financial impact.

In broader societal impact terms, one landlord commented:

“I wish George Osborne would leave private rental landlords alone for a while. He doesn’t seem to stop tampering with the industry. God knows where this government would be if all us private landlords ‘sold up’. There would be queues of homeless people looking to local councils to house them, and they DO NOT have anywhere to put them.”

The pain and disappointment of landlords is obvious. It remains to be seen, though, whether last year’s frustration translates into concrete action in 2016 – an interesting year ahead for buy-to-let lenders.

To get more of our housing market insight visit the Landlords Panel and Mortgage Achilles pages or get in touch with me: mark.long@bdrc-continental.com.

Our opinions