Landlords in London are leaving the market “in droves”, ARLA has said.
The trade body said that in December, its lettings branch members reported an average of six landlords selling up and quitting the market.
The number compared to a national average of four, and was double the number of landlords selling up in the north-east, midlands, east of England and south-west.
In each of those regions, agents reported three landlords selling up.
ARLA Propertymark chief executive David Cox said: “Over the last few years, landlords across the country have been pushed out of the market by increasing costs and legislation, and new investors have been deterred from entering.
“The issue has particularly intensified in the capital, which may be the result of landlords starting to receive their first tax bill incorporating the increase in taxes from the mortgage interest relief changes which came into force last tax year.
“If this trend continues, coupled with the Mayor of London, Sadiq Khan’s recent pledge to introduce rent controls, it will only serve to make the situation worse for London’s renters as more landlords are forced to sell up.
“As the supply of rental accommodation falls further, tenants will face more competition for properties, which will push up rents on good-quality, well-managed properties, and leave the vulnerable and low-income people which rent controls are designed to help, in the hands of rogue and criminal operators.”
A total of 364 ARLA agents were questioned last month, of whom 60 are in London.
Where I am net yields are down to @2%.
Rolling inward investments is constant and required. Legislation is only becoming increasingly onerous. The risk level is increasing.
When safe boring funds offer a net yield 25% higher than rental property why would any Landlord bother?
Any fund now with a comparable level of risk to being g a Landlord would be running to towards 4%.
Either house prices need to come down, or rental yields will have to increase. Or a combination of both.
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Normally a landlord might bother with a low net yield if the gearing makes it worthwhile or if there is a chance of significant capital gain. Now… we are being taxed on mortgages, there is the possibility of interest rate rises and the market has cooled.
In response to your question as to why landlords would bother…. Beats me!
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And next year their tax bills will be even greater thanks to the Osbourne attack.
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You mean the Chancellor removing an egregious anomaly in the tex system. You want to be taxed like a company? Then form a company to do your business like everyone else.
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That is fine but don’t grumble when tenants loose their homes, supply reduces and rents rise. The tax does not affect me personally but massive changes after people have committed significant investment is not reasonable.
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2% is Gross Yield? As ROCE would be much higher.
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Oh I love all this. As a landlord totally unaffected by all but one of the measures introduced by Osborne I rejoice in the opportunities to increase rents. Section 24, good excuse to increase rents in line with other landlords even though I am not affected. Tenants fees, good excuse to increase rents in line with other landlords even though I am not affected. Selective licensing, good excuse to increase rents in line with other landlords even though I am not affected. Landlords leaving the PRS, good excuse to increase rents in line with the remaining few. The threat of rent controls, good excuse to increase my rents every year, something I have never done before. Need I go on, thank you Mr Osborne for making my business more profitable.
There is a single word I would like to use to describe George Osborne but cannot as I do not wish this post to be deleted by the moderator.
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And Corbyn will cap rents!
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This has been blatant political posturing from the two main parties to get votes. We all know that virtually the only reason rents are so high (outside London) is because there has not been enough new build both in the private and particularly in the public sector to satisfy demand. Most of the problem could be solved by increasing the supply of new social housing tenfold and allowing local authorities the freedom they had a generation ago. Everything is happening so slowly the problem is just becoming exacerbated. So, say landlords are being greedy and and justify bringing in rent controls and forget all about what happened in the 1970s with rented accommodation was like looking for needles in haystacks. It’s about time we all started looking for a new form of government; the current form of democracy is well past it’s sell by date (and I’m not thinking about dictatorship, before someone picks this comment up!).
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I will be selling my property in Cambridge when the fixed rate mortgage comes to an end (by then we will know about is happening with the EU mass) unless by then yields have greatly increased due to other landlords selling. A 30% rent increase will be enough to stop me selling, if I lived near the property I would consider “furnished short let’s” to get this.
But I now live in the North West and the maths still works for renting out local properties, party due to not having any agent costs on a local property.
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My concern us that while the lunatics are running the asylum and forcing landlords out of the PRS who will house the ever increasing numbers of homeless people on our streets
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It will get much worse if Corbyn and cronies take control….. a mass exodus?
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What a ludicrous article. Firstly, BTL landlords still enjoy significant – and unwarranted – tax advantages. Basically able to utilise corporate tax breaks even though they are not corporates. Secondly, they have benefited massively from the run up in prices in London and will be very lightly taxed on those gains. But most importantly who are the BTLers “selling up” to? Either new BTL landlords or to owner occupiers. If the former then there is no impact on the rental supply. If the latter then prices will be lowered for first time buyers which can only be a good thing. And every FTB is one less renter!
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You lost me on that!
The lead story is landlords selling up because: “Over the last few years, landlords across the country have been pushed out of the market by increasing costs and legislation, and new investors have been deterred from entering. “the Mayor of London, Sadiq Khan’s (Labour) recent pledge to introduce rent controls”.
Nearly all are concerned and worried … is “the hassell” worth the trouble. Only a handful have more that 3 properties compared to the majority of the rental market which has landlords with 1 or 2 properties (the tax issue in the main really won’t affect most). The constant one sided view by government towards the lettings industry is based on ignorance and misleading information, often racked up by the likes of Generation Rent and Shelter and labour politicians who have their own personal agenda. Good landlords see themselves as being victimised by the state and very much one-sided.
Labour made it clear that they want to cap rents and long term protected tenancies some years ago and that idea they haven’t shelved. Lettings court is a new one but the draft makes it one sided against Landlords, often loosing £k’s to unscrupulous tenants who just aren’t accountable. The state has been using the private sector to cover up its lack of social housing for over 3 decades and realising it can’t catch up, is in take over mode!
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If I sell up my 4 HMOs, where are my 16 tenants going to live? 4 of them can buy the houses (and I will prefer to sell to them rather than another landlord as OOs pay about 50% more than LLs in Oxford) but there will need to be 12 more houses to house them. You don’t think that will push up prices?
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More likely than 4 of your tenants buying your HMOs is that 4 couples/families who aren’t your tenants buy them.
That means they vacate their current properties, whether they’re living with a different landlord or living at home to save on rent.
Their moves remove demand from the rental market, which drives house prices down as it constrains how much other landlords are able to pay to enter the market.
More HMOs will be created, but at a lower price because they are less economic than before.
Meanwhile, more and more new council housing will come through the pipeline as councils start to build again.
All those trends will help your 16 tenants find new homes.
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