Landlords’ confidence has fallen as investors face the prospect of higher tax costs and weakening house prices, the sixth ‘Buy to Let Britain’ report by Kent Reliance shows.
The report reveals that 41% of landlords are confident about the prospects compared to 67% shown three years ago.
The value of the sector has risen by £68bn in the last year meaning it is now worth a record £1.3tn.
House price inflation has also slowed, with the annual average increase slowing to 3.2% in the last year.
The report highlights how 27% of landlords saw tenant demand increase in the last quarter which is down from 39% a year ago.
Furthermore, 19% of landlords now expect to reduce their portfolios compared to 13% increasing as amateur landlords leave the market in response to the new tax rules.
A quarter of landlords who have sought mortgage finance this year have found doing so more difficult, with a further 6% seeing their application rejected all together.
In addition, one third of landlords expect to raise rents in the next six months, compared to just 3% who expect them to fall.
Andy Golding, chief executive of OneSavings Bank, said: “A perfect storm of weakening house prices, higher taxes and lending restrictions have knocked investors’ confidence.
“Uncertainty will pass, but the impact of changes to mortgage tax relief and underwriting standards will leave a more indelible mark on the sector.
“There is still an underlying supply and demand gap across the country and given the inability of any party to win a clear majority in the election, the implementation of a strategy to create a necessary housing boom seems unlikely.
“Affordability issues will therefore remain, and rental accommodation will retain its importance to those unable to take their first step onto the property ladder.”