Latest research reveals that the crackdown on the buy to let market is encouraging UK landlords to sell up.
Of those surveyed, half of the UK landlords looking to sell their properties are doing so because of the changes to buy to let tax relief announced in the summer, research from Your Move and Reeds Rains has shown.
Rent rises may slow to 1.4% over the next year landlords have predicted.
If these predictions are correct, this would be a significant slow-down from current levels, given that the latest Homelet Rental Index recorded rents as rising by 7.5% in London and 3.5% outside.
Conversely, demand continues to be as strong as ever, with over half (52%) of landlords experiencing increased tenant demand in the last three months.
Similarly, more than a third (35%) of landlords said they raised rents due to strong competition from tenants for each available property.
Adrian Gill, director of Your Move and Reeds Rains, said:
"Landlords could be forgiven for feeling a little deflated at the moment and its worrying to see this may motivate many to reconsider their investment.
"The government's tax changes appear to be making investing in buy-to-let less attractive because of the seemingly smaller profits margins on offer in the future. If a 10th of landlords do decide to leave the industry, this would seriously shrink the number of properties available for tenants.
"At a time when tenant demand is only rising, shorter supply will only translate into increased rents. This may mean landlords are underestimating the likely pace of future rent rises.
"The government needs to cut the red-tape involved in providing homes for renters if they hope to maintain a healthy supply of rental properties. With the Bank of England keeping a wary eye on the buy-to-let market, further regulatory interference may only make landlords' and tenants' lives harder.
We need landlords to stay in the market and invest further in the sector, in order to match future demand."
Mortgages for Business is currently running its biannual Property Investor Survey, which is designed to gauge landlords’ views on finance for investment property.
New questions have been introduced to capture landlords’ sentiment on the changes to tax relief and identify how they plan to deal with the situation going forward.
Jeni Brown, Head of Residential and Buy to Let Lending of Mortgages for Business said:
“The results of the survey are analysed and fed back to lenders in aggregate to help them design products which more closely reflect the on-going borrowing needs of property investors.
The more responses to the survey we get, the stronger the collective voice!
It only takes a few minutes to complete and at the end of the survey, as a thank you, participants are invited to enter our prize draw for the chance to win a luxury hamper which will be delivered in time for Christmas!”
If you are a landlord, you can take the survey here.
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17th November 2015