More Landlords Are Selling Than Buying

The number of landlords planning to downsize is at an all time high, according to new research

The research by the NRLA, the National Residential Landlords Association, shows that 12% of landlords sold properties in the second quarter of 2023, but only 5% bought.

The research also found that 37% of landlords are planning to cut the number of properties they let in the next year. While just 8% are looking are planning to increase their portfolio – which is not enough to make up the shortfall as landlords exit an ever more competitive market.

Don’t forget, we have touched on the plight of tenants over the last few months, as they struggle to find homes, due to increased rents and huge competition for properties as demand continues to outstrip supply.

What is causing this landlord exodus? Rising mortgage rates are one element – but the increased risk that comes with higher rents cannot be ignored. Landlords are worried about their tenants’ ability to pay, and the knock on effect that will have when they have larger monthly mortgage repayments

But there are also government policies that you could argue have driven landlords out of the sector – including the additional tax pressures.

While the government has indicated it is looking to support homeowners – there hasn’t been much discussion about supporting landlords, and by extension, tenants. The chief executive of the NRLA Ben Beadle says:

Households renting privately are facing the full force of the supply crisis, and change is needed now to prevent the situation from worsening over the next twelve months.

And there are figures showing that many landlords are already suffering a huge drop in their rental income, in some cases almost 60% less. As interest rates rise,  do you know how that is going to impact your bottom line? 

Personal finance website has done the maths and discovered that an average landlord has lost over £4,000 income per property in the last year.

By looking at average house prices, interest rates and rental prices, a landlord who took out a two-year fixed rate mortgage in June 2022 could expect to receive around £609 a month from the rental income. But remortgaging in June 2023, with a much higher interest rate, would give an average return of only £250 a month – a whopping 59% drop. With figures like that, it’s understandable why so many landlords are throwing in the towel!

Kate Steere, Housing Expert at said:

We’re seeing a trend of landlords pulling out of the buy-to-let market as consecutive base rate hikes have made it unprofitable for them to continue. This will have a worrying impact on an already competitive rental market, leaving renters with fewer options and rising costs as they attempt to navigate the cost-of-living crisis.

While these numbers are worrying  – and we can see that a significant number of  landlords are leaving the sector –  it’s worth taking time to consider your options before deciding that giving up your portfolio is the right step. Landlords are a key part of the housing industry in the UK, and are necessary for those who are not ready or unable to buy their own home or do not want to. Many pundits feel that a tipping point will be reached where the government will have to step in to support landlords and tenants.

It’s also important to consider the long term view. Property is still one of the most reliable investments you can make – safe as houses as they say. But it is a long term one, and in the course of the years, possibly decades, you will own a property, this turbulence is likely to be short lived

So, take the time to consider the options available to you and, most importantly, get advice. Speak to a mortgage advisor, like the guys at Mashroom Mortgages, before you take your next step

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