Growing numbers of landlords in the UK are looking to sell their property as they have become fed-up with Government legislation – and plans that will shake up the sector.

So, what is making landlords sell buy to let property?

The answer is quite a lot. As landlords of many properties ourselves, we spend a good deal of time managing tenancies. And so, we know what it takes.

Here we list the biggest changes recently introduced – and then highlight why this situation will get worse leading to fewer homes to rent and rising rents.

Why the UK will lose 50,000 rental homes in 2022

sell buy to let

As a result of the Government’s war on landlords, Britain will lose almost 50,000 rental properties this year.

That’s according to a survey by Hamptons estate agents that found more landlords are selling up rather than buying. The market is set to lose, on average, roughly 3,800 landlord properties every month in 2022, that’s more than double the number from two years earlier.

This is bad news for renters, as the already tight supply of rental properties is set to get even tighter. Landlords are selling up at twice the rate they are buying, so the pool of available rentals is shrinking rapidly. And they can also now find ways of selling properties with tenants in place too.

If you’re one of the many looking for a place to rent, it’s going to be increasingly difficult to find one. And if you do, chances are it will be more expensive than it would have been just a year ago.

The government’s policies are clearly having an impact on the buy-to-let market.

If you’re a landlord, now might just be the time to sell up quickly while there is still good demand for your property.

Rule changes hit profits

The Government has implemented a series of rule changes that have made it harder for landlords to make a profit or assert their rights.

A total of 1.25 million housing transactions are expected to take place this year, based on data from HMRC. Of these, it is estimated that 16%, or 204,440, will be sales of buy-to-let properties. It’s also expected that purchases by landlords will account for 13% of transactions, or just 157,954 properties.

This means that the market could lose 46,486 rental properties over the next year year alone, or an average of 3,874 a month.

Landlords want to leave

A survey from the National Residential Landlords’ Association (NRLA) has found that 23% of landlords are planning to sell at least some of their buy-to-let properties during the next 12 months. This is up 20% from last year and is a direct result of punitive tax increases since 2015 and government policy which have made it harder for landlords to operate profitably.

Ben Beadle, the NRLA’s chief executive, warned that this exodus of landlords from the market will drive up rents and leave tenants with less cash to save for a deposit on a house of their own.

This is yet another example of how badly thought-out government policy is making it harder for people to access affordable housing.

He said: “The last six years prove it was a nonsense to think that cutting the supply of rental housing when demand is so strong would make it easier for those saving for a home of their own. We need a strong and vibrant private rental market that meets the needs of those who rely on the flexibility it provides. Those who need somewhere to live before becoming homeowners and those for whom the promise of social housing tomorrow provides cold comfort today.”

Abolition of Section 21

The much-anticipated Government White Paper, ‘A Fairer Private Rented Sector’, has laid the future for the private rental sector – and it confirms the abolition of Section 21. That’s when a landlord can give their tenant a ‘no fault’ eviction notice.

Once in place, landlords will need to have a reason for ending a tenancy, such as wanting to sell the property or needing to move back in themselves.

Unless something replaces section 21, landlords may find it more difficult to evict someone with serious rent arrears or who is causing disturbance for neighbours. No doubt lenders will also be watching this space very carefully as they face the prospect of greater difficulties in obtaining possession too.

The new White Paper also unveiled plans for a property portal that will make it easier for landlords, tenants and local councils to comply with the law and access other important information. The portal should allow tenants to perform checks on landlords before renting from them and make it easier for local councils to identify and penalise criminal landlords.

The portal will also include a database of rogue landlords, so that the public can easily see which landlords have been breaking the law.

It will also soon be illegal for landlords or their agents to refuse to rent to families with children or those receiving state benefits.

In future, this may be extended to include other groups, such as ex-offenders.

And landlords will need to have a good reason for refusing a tenant’s request to keep a pet in their property. Instead, they will be able to insist the tenant has insurance to cover any potential damage that the pet might cause.

EPC changes

Landlords also saw the introduction of new Energy Performance Certificate (EPC) proposals in 2018 that set a minimum rating of E for all new tenancies. However, if government get the go-ahead, from 2025, the ratings are set to go up again to C or above for new tenancies. The costs for making energy performance improvements to rental properties is expected to be in the range of £12,000 – £15,000. This may be a bridge too far for many landlords who ultimately decide to quit the rental market.

And in 2028, there is talk that the rules may be extended to ALL rented properties, even those with an existing tenancy.

Those punitive measures

As mentioned, a series of punitive measures brought in since 2015 has led to an exodus of landlords from the sector and they include:

Mortgage interest relief changes

Whilst any other business can offset the financing costs of their business, landlords are now taxed on this. This has led to landlords now falling into the 40% tax bracket because of having a second income through no fault of their own. It’s no surprise many landlords have subsequently decided to sell buy to let properties.

Selective licensing

Selective licensing has been one of the most onerous forms of legislation to have been introduced in recent years. Landlords have long been arguing that such schemes were only introduced as a means of local authorities generating additional income. Whilst compliant and willing landlords wilfully submit their applications, it’s the rogue landlords that to hide in the shadows that cause most of the problems. Many landlords have simply found this new legislation too much and have decided to exit by selling their properties with tenants in place.

Fire Safety

All good landlords know that fire safety is important and from 1 October 2015, smoke alarms must be fitted on all floors within rental properties. We think this should be taken one step further. We say that smoke alarms should be fitted wherever it is felt there is a risk of fire.

An Electrical Installation Condition Report (EICR)

This check on a property’s fixed wiring is also known as ‘Landlord Safety Test’. It must be carried out by qualified electricians every five years. Landlords must also have Portable Appliance Tests (PAT) carried out once a year on appliances supplied by a landlord.

In summary

The future for many landlords, especially ‘accidental landlords’ and those with small portfolios, is starting to look bleak.

No one can predict the future but many landlords who remain in the market will be hoping for significant rental increases as rental property supplies fall. As they say, the proof of the pudding will be in the eating!

If as a landlord, you have been thinking of selling your property contact our experts at National Property Buyers. Our team are on hand to answer any questions you may have.

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