Over half of landlords have sold off properties a year after the Government’s crackdown on buy-to-let investors came into force.
Research by crowdfunding platform, Property Partner, found that since changes to mortgage interest tax relief were introduced in April 2017 many landlords had also hiked rents to address the impact of the increased tax bill.
It means, warned Property Partner, that the clampdown was having a knock-on effect on tenants as well as landlords.
Key findings of the research found 54% were selling some or all of their buy-to-let properties and 47% were increasing rents or thinking about doing so. Landlords would consider upping rent by as much as 16%, the survey found.
It also revealed 64% of buy-to-let landlords had noticed their finances had been negatively impacted by mortgage interest relief changes.
But the increased stamp duty on second homes had also had an effect, with 59% of landlords revealing their finances had been negatively impacted by this change.
Meanwhile, 44% said their finances had been hit by harsher mortgage affordability checks.
Robin Foxhall, a buy-to-let investor who manages a portfolio of eight properties with his wife, said: “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.”
Mark Weedon, head of research at Property Partner, said the Government’s plan was to cool the buy-to-let market in order to increase access to property for potential first-time buyers.
But, he said, the fact many landlords were being forced to consider increasing rents to offset their losses would hinder those looking to take their first step on the housing ladder.
He added: “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.”
It’s a total fallacy to think Landlords control their rental prices by anything other than a tiny amount. Raising rent by 16% will simply turn away potential renters.
There are still plenty of landlords out there not needing to increase prices and preferring quicker transition periods.
Yet another policy the government did not think through, causing pain to the very tenants they had intended to help – because they are either evicted because the landlord is selling the property, or the rent hike (to cover increased landlord taxes) make it harder for first Time buyers to save their deposit – thus postponing the day they can buy their first property. Double whammy !