Landlords continue to exit the BTL market

There was a further rise in the number of landlords exiting the buy-to-let market, new data shows.

Belvoir’s Q3 Rental Index, compiled by TV property expert Kate Faulkner, reveals that landlords are continuing to exit the property market, although not at the rate anticipated by previous research.

Rents in the UK’s private letting sector increased, albeit marginally, as the supply to let dropped again, according to the research.

Agents are reporting that buy-to-let remains a good medium to long-term investment in most areas, provided buyers do their research prior to purchase.

Belvoir’s CEO Dorian Gonsalves said: “Statistics show a slight increase of 48% to 52% of landlords selling up to three properties and a similar number of landlords selling between four to five properties compared to Q2. There was a decrease from 17% to 12% for landlords selling six to ten properties.

“Two years ago 10-18% of offices were reporting no sales of landlord properties, but this figure has now fallen to 4-5%.

“Overall, our conclusion is that the number of landlords selling properties is increasing, albeit not at the rate that some research has suggested.”

The main reasons for landlords exiting the market are tax changes, constant regulation and increasing legislation, landlords moving back in, and lower investment returns, as well as uncertainty over Brexit, and what this will mean for the market.

When selling properties, only 19% of offices reported properties being sold to first time buyers as the government hoped, however, according to Belvoir’s survey, 33% of offices reported properties are being sold to other landlords and 23% are general sales.

Gonsalves suggests that the government’s plan to increase home ownership by reducing the attractiveness of buy-to-let is not necessarily working.

According to HMRC statistics residential transactions were 8% lower in Q3 2018 when compared to Q3 2017.

Gonsalves added: “In the past we have found that when people decide not to commit to property purchases, the demand for rental properties increases, which will typically lead to higher rents and higher yields for landlords.”

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