Research in the buy-to-let market by Aldermore bank surveying 1,000 UK-based landlords has revealed that nearly half (48%) of landlords are considering divesting due to an increase in regulation and rules. 

The rule and regulation changes seen recently, including the introduction of a 3% stamp duty on rental/second properties, changes to taxation and more complex mortgage applications, has meant nearly three in five (59%) say it is much harder being a landlord now than five years ago. 

Two thirds (68%) of respondents feel that regulatory changes have been too broad and need to focus more on punishing rogue landlords

Over half (53%) believe private landlords exiting the market would hurt the quality of properties available to tenants

Meanwhile, three in five (59%) believe being a landlord is now more difficult than it was 5 years ago

The impact of increased regulation is clear, with two thirds (68%) of respondents feeling that recent changes have been too broad and need to focus more on punishing the rogue landlords. 

A quarter (28%) said that regulatory change was the biggest threat to their investment, while others cited tax changes (33%) and high maintenance costs (28%) as barriers. 

It has also led to increased admin with two in five (40%) saying increased rules meant their most recent mortgage application was more difficult than previous.

In addition, it appears to have affected business decisions, with 49% of landlords saying the increase of stamp duty has prevented them from expanding their portfolios. 

Three in five (59%) of landlords also believe that the ban on lettings fees may result in landlords raising their rents due to the increased costs put upon them.

Rental market may be negatively impacted

With landlords and BTL property being a critical part of the housing ecosystem, the impact of divesting would be wide-ranging; with 53% of landlords believing that private landlords exiting the market would hurt the quality of properties available to tenants. Whilst these landlords service a wide and diverse group of the population ther is a high predominance of those in earlier life stages; 32% of their tenants are young couples and 29% are parents with young children. 

Despite the pressures that landlords are currently feeling, the research revealed that more than half (52%) would still recommend becoming a landlord as an investment opportunity. 

Damian Thompson, director of mortgages at Aldermore said: “Private landlords exiting the UK market would mean less choice and likely impact negatively the quality of rental properties for tenants.

“The number of people renting in the UK has been rapidly growing, up 1.7 million in ten years2, so it is vital there is enough rental supply to meet this demand. 

“Landlords may have been impacted by increased costs and more complex processes in the past 5 years, but the rental market continues to be a strong long-term investment. Landlords will need support and advice on how to manage their portfolios going forward from lenders and the wider industry so they can continue to support the Private Rented Sector the way it needs to be.” 

Notes 

1Research conducted by Opinium in Q4 2019, with a sample of 1,000 UK landlords
2 Based on the latest Office of National Statistics (ONS) data showing the number of households in the private rented sector in the UK increased from 2.8 million in 2007 to 4.5 million in 2017, an increase of 1.7 million (63%) households.

Link to press release here

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