Over half of buy-to-let landlords selling of properties after buy-to-let changes

Michael Lloyd

April 10, 2018

Some 54% of buy-to-let landlords said they are selling all or some of their buy-to-let properties as a result of the buy-to-let changes, Property Partner found.

Of the three key buy-to-let changes, the phased reduction of mortgage interest tax relief introduced last April has caused the biggest financial shock for investors:

Some 64% of respondents have had their finances negatively impacted by the mortgage interest relief changes and 59% have had their finances negatively impacted by increased stamp duty on second homes. And about 44% have had their finances negatively impacted by harsher mortgage affordability checks.

Robin Foxhall, a buy-to-let investor affected by the changes, said: “My wife and I manage a small portfolio of eight buy-to-let properties which we have built up over time.

“Whilst we believe residential property continues to be a strong asset class, the new government regulations have made us reconsider where we invest in the future.

“The new rules mean that returns from our portfolio will reduce whilst also making future investments less appealing. As a result we continue to look for alternative channels to invest in residential property which are easier to use and deliver healthier returns.”

Some 47% have already raised rents or are considering doing so because of the changes and those thinking of upping rent would be willing to do so by an average of 16%.

Mark Weedon, head of research at Property Partner, said: “The government’s plan is to cool the buy-to-let market in order to increase access to property for potential first time buyers.

“Unfortunately it’s clear many landlords are being forced to consider increasing rents to offset their losses, which could actually hinder those looking to take their first step on the housing ladder.

“The UK housing market remains vastly undersupplied. Attempts to tweak demand with a crackdown on investors will not solve the housing crisis- the real solution is to build more houses.

“We should also remember a number of people in the UK choose to rent and enjoy the flexibility renting provides. Professionalised landlords are central to supporting this group in the UK.”

Property as an investment remains attractive with 32% looking for alternative property investments. This could include property crowdfunding which Property Partner has seen an increase in client enquires for.

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