A ‘perfect storm’ is brewing for buy-to-let landlords

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News that a growing number of buy-to-let landlords are likely to exit the private rented sector or reduce the size of their property portfolio over the next 12 months due to policy changes comes as little surprise to many people, including a senior property investment specialist.

The findings of a survey by the National Landlords Association (NLA), published last week, shows that 20% of private landlords look set to reduce the number of properties in their portfolio over the next 12 months due a range of anti-landlord policies, especially in relation to new tax legislation.

The introduction of the 3% stamp duty surcharge, the scrapping of the 10% ‘wear and tear’ tax allowance, and the fact that mortgage tax relief is currently being phased out, have prompted concern that there could be a net reduction of private rented properties this year, as more experienced landlords sell rather than buy.

Comment on NLA’s findings, Simon Heawood from Bricklane, the property investment platform, said: “We will see steadily increasing outflows from the buy-to-let market, in favour of a continual consolidation of portfolios around professionalised, large scale landlords, who in turn benefit from scale advantages, tax-efficiencies, and professionalised approaches to investing and driving up tenant service provision.

“A perfect storm is brewing for landlords looking to property simply as a financial asset. Policy makers across the political spectrum are acknowledging that home ownership is valuable because it affords permanence and security, and not just for the financial returns which placated constituents of yesteryear.”

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Written by: Houseladder