More than a quarter (28%) of mortgage brokers’ landlord clients plan to sell properties as a result of the current buy-to-let environment, according to a survey by broker forum Cherry.
The research also revealed that 39% of BTL investors plan to increase rents. Meanwhile, just over a quarter of landlords intend to make no changes to their investment in the current climate and just 3% intend to buy more properties.
Donna Hopton, director at Cherry, commented: “Recent turbulence in the money markets has impacted all mortgage clients, but buy to let has arguably been hit hardest given the detrimental impact that higher rates have on stress testing and the loan sizes available to property investors.
“If you then consider the stream of regulatory and tax changes that landlords have had to deal with in recent years, combined with upcoming EPC requirements, it’s unsurprising that so many are choosing to sell properties.”
However, Hopton added that there are also “millions of landlords who remain committed to the market” and highlighted continued demand from tenants and rising rents, meaning there will be “plenty of opportunity” for property investors.
Mike Cook, chief mortgage officer at MFS, agreed there was a danger of overstating the declining appeal of BTL.
“With huge demand from renters and long-term capital growth on offer, residential properties will continue to attract interest from a wide range of investors,” Cook said.
He added: “The challenge right now is for landlords, brokers and lenders to work together for the greater good. It starts with flexible and competitive products, whether that’s bridging finance or BTL mortgages.
“Brokers and lenders must provide landlords with access to the capital they need to purchase, renovate, refurbish and improve the EPC ratings on properties. This will ensure a buoyant rental market and help drive up standards. Further, by delivering choice and transparency, lenders can also help landlords navigate the dual challenges of base rate hikes and rising inflation.”
This is true, we’re getting many many landlords 1) Hugely increasing rents due to mortgages going up or 2) Selling up and it’s just not no worth it after mortgages and crazy high tax bills.
Either way, tenants will be the ones that suffer.
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I would disagree with Mike. I don’t think there is any danger of overstating the decline. The BTL proposition is a shadow of what it was 15 years ago. Taxed on turnover, 3% additional stamp, no wear and tear allowance. Highest rate of CGT of any asset class. One of my properties which is in Scotland. I am required to pay a landlord registration fee and can neither increase the rent or evict the tenant. That isn’t investment as I understand it. Having been instrumental in guiding thousands of BTL investors throughout the mid 2000s. I can now categorically say I believe everything that once made it attractive has been slowly stripped away. It has lost its lustre. The real decline is only just beginning.
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Just a suggestion; there are lots of these surveys/reports coming out at the moment and my thoughts are that our “professional”? bodies should be making a concerted effort to ensure that every MP gets an email every day containing the latest survey/report along with the associated replies and “chatter”. Even better if our “professional”? bodies were to organise something such that we, as members, just clicked a button every morning and the same email was sent to MPs thousands of times. At least that way, we could be seen to be doing something and eventually some of the MPs might open the emails, read the content and shuffle out from under the mushrooms that they hide under!
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Excellent idea Jeremy.
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