Could the UK be on the verge of a mass exodus of landlords? It seems like an ominous query, but when buy to let (BTL) landlords are questioned about their investment properties, it is clear that choosing to become a landlord is not as straightforward, attractive or appealing as it once was, many years ago.
There are simple explanations for this. Buy to let landlords, in recent years, have suffered from a steady barrage of reforms to rules and regulations, which has made the processes around managing a portfolio of BTL properties increasingly expensive, time-consuming and complex.
Last year alone, the UK government introduced more reforms to stamp duty and changes to mortgage tax relief for buy to let properties, in addition to amending Section 21 notices in regard to unfair evictions, and introducing the Tenant Fees Act.
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Although regulations and law play a crucial role in ensuring that the rights of tenants and the interests of landlords are not oppressed, abused or exploited, the extent and amount of recent reforms would suggest that the PRS (Private Rented Sector) is becoming unfairly weighted against landlords.
In some respects, the government’s position and its goals are understandable. However, the imbalance which has been created between housing demand and supply has resulted in affordability issues and rising property prices, for those looking to make a move to a larger property as well as first time buyers. Targeted regulation in the private rented sector has been aimed at curtailing and detracting buy to let investors from buying excessive numbers of residential properties.
However, this has prompted an interesting debate: how much new regulation is deemed excessive? In order to answer this, a survey was conducted which questioned more than 750 buy to landlords, who owned a minimum of three residential properties within the UK.
The research was overseen by Accumulate Capital, the property investment firm, who asked landlords their opinions of the private rented sector, and if the changes currently taking place in the sector would affect the ways in which they manage their property portfolios.
Shockingly, the research discovered that more than half of landlords, at 53 per cent, stated that if they knew how regulated the private rented sector would become, they would not have bought their investment properties at all.
In addition to this, 37 per cent of the landlords questioned plan to sell a minimum of one of their rental homes in the forthcoming year, with 61 per cent of these explaining that they are choosing to do so as a result of the growing taxes and regulations in the sector. Now, it seems that a mass exodus of landlords from the sector could be a real possibility.
However, this does not mean that landlords will be choosing to retreat from the property sector entirely. Investment in property remains an attractive prospect for many, with development finance, debt investment and other alternative investment opportunities in property increasing in popularity.
Research has also revealed that more than one fifth of buy to let landlords, at 21 per cent, are thinking about other investment avenues such as the aforementioned alternatives in 2020.
If the UK government wishes to rebalance supply and demand in the property market, then the priority must be to ensure more residential developments are built across the UK. New measures should be introduced which make sure that property developers in the UK are offered the support they need to construct and fund more new build homes, which will improve the availability and affordability of housing.