Landlords’ confidence in the buy to let (BTL) sector has collapsed and is now ‘worse than levels witnessed during the financial crash’, according to the National Landlords Association (NLA).
NLA chief executive officer Richard Lambert told delegates at the Building Societies Association’s (BSA) annual meet-up for mortgage professionals that confidence in landlords’ business expectations has tumbled by more than a third over the past year – down from 67% to an all-time low of 43%.
The current level of confidence in the BTL sector is now 5% lower than levels witnessed after the financial crash in 2007.
Lambert outlined how the actions taken by the chancellor in last year’s summer budget and autumn statements has led the NLA to reverse its previous prediction of the continued growth of the private rented sector by another million more households over the next five years.
It now forecasts that, if landlords follow through on their intentions, there will be a dramatic sell-off of 500,000 properties in the next 12 months, followed by another 100,000 sold each year to 2021. The net effect will be that the private rented sector will be smaller by up to 136,000 properties.
The latest NLA Quarterly Landlord Panel survey shows:
- The proportion of landlords looking to sell in next 12 months has more than doubled since July 2015 (up from 7% to 19%).
- Over the next few years:
- 28% of landlords don’t plan purchase any more properties
- 10% plan to reduce their portfolio
- 5% plan to sell up completely.
“Two speeches from the Chancellor in 2015 have led to a crisis in confidence greater than when all but a few BTL products were immediately withdrawn from the market following the 2007 financial crash. Up to half a million properties could come onto the market as a result of the summer budget and autumn statement, which the chancellor will no doubt deem a success,” said Lambert.
“But there is no guarantee that these will be the one or two-bedroom flats or small houses that will appeal to first time buyers, especially as landlords are more likely to offload less desirable stock in less desirable areas. We’ve always said that Mr Osborne is blinded to the impact of his decisions by his commitment to homeownership.
“He may have intended to focus on the small-scale part-time investor, but it’s the larger and more professional landlords who will be hit worst by cuts to mortgage tax relief and increases to stamp duty, and who appear most likely to leave the sector. What happens to the people these landlords house if they still can’t buy and there are fewer and fewer properties available to rent?”
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Personally I absolutely disagree that the Chancellor gives a damn about home ownership. Everything he does is about taking tax or selling off assets. The commitment to building 'affordable' homes is not even going to make a dent on the shortage, and even that is turning into more asset sell-offs, which the builders will land bank.
Yes he sold the message well in the budget by going on about 'level playing fields' and all that. Generation Rent fell for it so applauded him right across the land, though I think a lot of them are now becoming aware what it means in higher rents (which is just tax going to the coffers), less choice, evictions and so forth.
However Mr O's chums that will benefit greatly when they build their huge rental developments will no doubt be very grateful to him, so that should put a smile on his face.
It is absolutely appalling the hoops we are having to jump through to get BTL mortgages at the moment I wave wasted hundreds of pounds on applications only to be told that my rental does not meet the yield expected, IActually had one property they returned £975 for a mortgage of £380 pax and was told it would only achieve £925 even though the Tenants we already paying £975 and was still knocked BAck, The Government are clearly working with the Lenders to stop BTL eats at this time, have others had this problem, Peter
I agree with John. This entire initiative is clearly designed to benefit the chancellor's corporate pals by driving small investors out of the market.
It has nothing whatever to do with increasing affordable housing and everything to do with providing big business with opportunities to corner one of the few remaining diverse markets.
Don't just complain, get behind the judicial review, it seems to be the best way of fighting this right now.
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