Despite concerns that private landlords are planning to flee the buy-to-let market, thus reducing the supply of much-needed housing in the sector, new research suggests the vast majority of those who already own investment homes remain committed to keeping them.
The latest insight from specialist property lending firm, Octane Capital, has revealed that confidence in the sector remains robust, despite the government’s meddling with the sector, with higher taxes reducing the financial returns available to buy-to-let investors.
In fact, just 8% of those surveyed stated that they had reduced the size of their buy-to-let portfolio over the last year.
However, government interventions by way of legislative changes remained the biggest concern for the year ahead, followed by the increasing running costs of buy-to-let investment such as maintenance and energy bills.
Some 41% of landlords surveyed said they would like to see recent changes to capital gains tax (CGT) allowances reversed, with the government’s interference in the sector also the biggest concern, along with the increasing day to day cost of buy-to-let investment driven by the cost of living crisis.
Some 60% of those surveyed do not believe that we have hit a peak where interest rate hikes are concerned and do not believe the market will be more settled during 2023.
As a result, just 16% of those surveyed stated that they intend to increase the size of their buy-to-let portfolio over the coming year.
When asked which government legislative change they would most like to see reversed, the recent changes to capital gains tax allowance ranked top.
The government plans to reduce the CGT tax-free allowance from £12,300 to £6,000 in April of this year, implementing a further reduction to just £3,000 by 2024.
The ban on Section 21 evictions and required improvements to EPC ratings also ranked as some of the changes landlords would most like to see reversed.
The CEO of Octane Capital, Jonathan Samuels, said: “It appears as though the exodus of landlords from the rental sector has been somewhat over exaggerated with just a small proportion opting to reduce the size of their portfolio in 2022.
“That said, while we’ve seen a degree of stability return following a shambolic mini budget last September, many buy-to-let investors remain cautious about the year ahead.
“This caution is likely to prevent them from investing further until a greater degree of certainty returns, although we must also tip our hats to the government in this respect, as their consistent attack on the sector remains the number one concern.”
I suspect it depends on which type of BTL investors you ask.
For those who are borrowing through a Ltd company probably the tax regime has had little impact. However those small landlords that were using the property for a pension and have seen muliple interest rate increases in the past year, resulting in paying even more tax on income they don’t receive. Then they are without doubt exiting the market. You need only look at BTL mortgage redemption levels for evidence of that.
Paying tax on income you haven’t made is just so fundamentally wrong that only landlords could have been the targets without the public shouting ” That’s not right”
Greedy landlords eh, so who cares.
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This ‘survey’ goes against every other survey and article we are seeing.
Why CGT changes would be landlords’ #1 concern is laughable. A few £k is nothing in the grand scheme of things? The biggest concerns are S24 [for unincorporated landlords], and the ending of S21 for all.
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The word “investing” is a bit misleading. It implies that existing landlords are expanding their portfolios and new landlords are being attracted to invest. All the article is saying is that many existing landlords are staying put and not deserting in the droves predicted. Maybe they are burying their heads in the sand waiting for the Government to see sense concerning regulation and reform or are a stoic bunch hanging on until push really comes to shove as contrary to promoted popular belief they have concerns for their loyal long term tenants and are pushing difficult decisions down the line for sentimental reasons.
Whatever is going on everyone is getting poorer making buying homes (even more) unaffordable for a growing number of people. So they turn to the PRS. Demand for PRS properties is dropping off we are told, but the fact is that demand still far outstrips supply in most areas so rents are rising.
So we have people who can’t afford to buy and more people who can’t afford to rent. Who is going to house these people? The Government, Local Authorities and Housing associations can’t do it but the PRS could if it’s role were properly appreciated and Landlords were given incentives to invest.
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The professional landlord with BTL is more likely to hold out and see before jumping ship as they are probably locked in and playing the gamble and taking advantage of the high rents currently being generated. Once the market flips into a down spiral, they will certainly jump ship. They are only in it for the money.
Does the story contradict?
“many buy-to-let investors remain cautious about the year ahead”.
“just 16% of those surveyed stated that they intend to increase the size of their buy-to-let portfolio”
So 84% BTL investors surveyed are worried. It should read 16% not the other way around. Its waiting to see, not increasing and that wait is, do we bail or not.
Compare that to something like 30% of non-BTL landlords leaving the market who have no lock-in arrangements with %redemption penalties etc.
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