Research by a lettings sector trade body shows that net growth of units within the private rental sector – that is, purchases of properties to let set against sales of existing homes to rent – has fallen by 63 per cent.
The period of the fall dates back to the July 2015 announcement by former Chancellor George Osborne that mortgage interest tax relief for landlords would be phased out – starting next week.
Analysis of members’ property transactions by the National Landlords Association has revealed the drop in growth.
Further research from the NLA shows that the proportion of existing landlords looking to buy properties in the coming year has fallen to its lowest ever point – 16 per cent.
The proportion of existing landlords who intend to sell property in the next year has more than doubled since July 2015 – rising from seven per cent to 16 per cent.
The association says this represents the lowest stated intentions for landlords to invest since the NLA’s Quarterly Landlord Panel, conducted in conjunction with BDRC Continental, began 10 years ago.
The NLA is now predicting a net reduction of property transactions by 2018.
“There has been a clear correlation over the past year between our findings on what landlords have told us they intend to do in terms of buying and selling in the coming year and their actual transaction activity” explains Richard Lambert, chief executive Officer at the NLA.
“If the trends keep moving in the same direction, then by 2018 we’ll have more experienced landlords selling than buying, contributing to a net reduction of private rented properties” he adds.
The NLA says some new landlords will enter the market to take up the slack, but the progressive removal of mortgage interest from April this year as well as a three per cent stamp duty surcharge on additional property purchases, means it will become increasingly difficult for anyone considering their first steps in the market.
“The headlines will read that a mass exodus of landlords will be a good thing, but the reality is more people now rely on private rented housing than ever before, and absolutely no good can come from fewer homes being available for those who need them most” concludes Lambert.