Several factors are pushing landlords to exit the rental market
The current buy-to-let environment is forcing more than a quarter of landlords to sell their properties, according to research by broker forum cherryplc.co.uk.
A survey on the popular broker forum has revealed that 28% of landlord clients are planning to sell properties, while 39% of buy-to-let investors say they will increase rents. Just over a quarter of landlords plan to make no changes to their investment in the current climate, while only 3% intend to buy more properties.
“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,” commented Donna Hopton, director at cherry. “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, there are also millions of landlords who remain committed to the market, and it’s a market of continued demand from tenants and rising rents, so there will be plenty of opportunity for property investors.”
Mike Cook, chief mortgage officer at Market Financial Solutions, agreed that rising interest rates, new EPC rules, and the introduction of various regulatory changes in the private rented sector had caused some landlords to consider their options.
“However, we should be wary 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 noted.
“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.”
Cook said 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,” he remarked. “Further, by delivering choice and transparency, lenders can also help landlords navigate the dual challenges of base rate hikes and rising inflation.”