There has been a significant drop in the number of buy-to-let landlords snapping up properties following the government’s outright assault on the industry, and the signs are that the volume of buy-to-let transactions are unlikely to increase any time soon, not unless the government reverses recent tax increases and unnecessary regulation in the buy-to-let sector.
Buying property has long been considered to be a safe investment, but the government’s ‘war on landlords’ means that buy-to-let suddenly looks like an unattractive proposition for some people, according to Paul Smith, CEO of haart estate agents.
“The buy-to-let market has been severely stung by the government’s war on landlords,” said Smith. “In some parts of the country, especially London, a buy-to-let property no longer makes the same return it once did.”
While some landlords will undoubtedly pass extra costs onto tenants by increasing rents, various experts believe that others will simply consider exiting the market due to the government’s new rules as renting becomes financially unsustainable for them.
However, Smith does not expect to see landlords with low profit margins exit the market, but rather concentrate more on investing for high yields, with many shrewd investors already recognising that the north of the country, not London, is where the best yields can typically be found.
“Investors will naturally gravitate north where values are cheaper and yields are higher - you can pick up a small portfolio of two bedroom terrace properties in Doncaster for the same price as a one bedroom flat in a new build London development,” he added.
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