New research from Rightmove shows almost a quarter of landlords are planning to sell at least one property from their current portfolio, despite substantial rent increases in some parts of the country.
When asked about future plans, almost a quarter of landlords say they are planning to sell at least one property from their portfolio: this is made up of some who say they will be decreasing their portfolio and others suggesting they will be selling all their rental properties.
The most common reasons given for selling are changes to legislation including recent tax relief changes and the ban on tenant fees leading to an increase in their costs for some.
The average landlord in the portal’s study rents out three properties, with a quarter of them owning just one. Almost a third are still planning to increase their portfolio, with the majority of those saying that property still delivers better returns than other investments.
Meanwhile separate data from Rightmove reveals record asking rents in all but two regions, amid a shortage of new stock for tenants to choose from.
Since 2016, landlords have seen the introduction of a stamp duty surcharge on second homes, a phasing of the reduction in tax relief and more recently the ban on tenant fees which some agents may be passing on in part to landlords.
There was a short-term flood of properties throughout 2016 and into 2017 caused by landlords who bought before the stamp duty surcharge but that stock has now dissipated and is currently 13 per cent lower than Q3 2015 before any of these changes came in.
Asking rents outside London are now at an all-time high of £828 per calendar month, pushed up by the biggest quarterly jump at this time of year since 2015, while the annual rate of price change rises to 3.2 per cent, an increase not seen since 2016.
Scotland and the North East are the only regional markets not to have seen record asking rents this quarter.
London, meanwhile, has seen the biggest quarterly jump in asking rents since Rightmove started recording this data back in 2012, leading to an annual rate of 5.6 per cent and a record average asking rent of £2,104 pcm.
Rightmove’s commercial director and housing market analyst Miles Shipside says: “There are a number of forces at play in the current rental market, all leading to record rents for tenants and fewer homes to choose from, yet demand remains strong.
“Worryingly for tenants there are signs that the stock shortage may worsen if some landlords follow through with their plans to sell up, though an increase in plans for build to rent properties may help to fill some of the gap. The overall feeling among those landlords who are planning to exit the market is one of frustration with many telling us that the tax changes mean it’s no longer financially attractive to keep their properties.
“Early data seems to point to some of the income lost through the removal of tenant fees being passed on to the tenant in higher rents, but it should still work out cheaper than paying the upfront admin fees as long as stock doesn’t constrict and rents don’t rise too much. What we really need now is more properties available to rent. Rising rents may tempt some landlords back in, but momentum is currently to downsize portfolios in spite of the prospect of increasing yields.”
In response to the Rightmove data, including the record rental prices, PropTech entrepreneur Neil Cobbold - chief operating officer of automated lettings payment system PayProp - describes the situation as “a perfect storm.”
He says: “The tenant fees ban, continued uncertainty surrounding Brexit and rising demand due to lower stock levels have all contributed. In the circumstances, it's reasonable to expect rents to increase further in Q4.”
Cobbold believes that this continuing rental growth is good news for agents and landlords, which in the short term improves their finances and in the longer term underlines the financial benefits of letting property.
“Moreover, rising demand means agents can promise lower void periods as eager renters snap up properties faster” he says.
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LL sole traders like me who have had enough are selling up.
But we are doing so with one being sold every tax year.
So I have 4 to go which means it will take 4 tax years to get out just before the next GE when again the prospect of a Looney Labour Govt rears its ugly head.
It is pretty pointless remaining a LL letting on AST when the threat of expropriation and rents controls exist.
Other forms of letting would be the only way it would be worth remaining.
But this would be pointless as existing BTL conditions prevent all letting apart from on single AST contracts.
Letting to unrelated sharers would prevent RTB but wouldn't prevent rent controls.
If I was starting out again as a LL there is no way I would bother investing in BTL property.
Lodgers would be my chosen route which is what I intend to convert to once all my rental properties are sold.
There is simply no point in remaining a LL letting to single households on an AST.
dont let as individual room as council charge landlord council tax and tenant not liable for it even though contract stated they are liable for it.
@S I
Yep that is why with unrelated tenant sharers you would only have them on one AST..
As far as I am aware most standard BTL mortgages don't allow individual AST in the same property..
If a LL did so then technically they would be in breach of mortgage conditions.
That would mean risking the loan being called in..
Simply not worth the risk.
So I would only ever have 1 AST and then all the tenants would be equally liable for the Council Tax.
But there are many LL gaming the system by breaching their mortgage conditions.
I have never heard of any LL being caught out by lenders.
As long as the mortgage is paid lenders don't seem to want to know whether LL are gaming the system.
I know that I will no longer let to single households on AST anymore.
From my experience very few can afford my properties unless they share so the single household doesn't arise.
But for me in 4 years time I will no longer thank god be an AST LL anymore.
Pity the 14 tenants that I will be giving NTQ!
thank you. I dont think LL are gaming the system. I am just simply not aware of the way council tax are issued to landlord if let individual rooms.
Oh believe me hundreds of thousands of LL are gaming the system.
Which is the major reason why there will never be a National LL Licensing scheme as it would detect all the LL gaming the system.
Council Tax with individual AST is owed by the LL so rents have to include CT costs.
I do believe that in the very near future any room that has an individual AST will be considered for ICTB.
I consider this inevitable as it would be a brilliant way for councils to extract more income out of the PRS.
Councils would know introducing such new CT legislation would not damage them electorally.
So they really have nothing to lose..
Doing so would seriously affect the viability of a rental property where individual AST's are used.
Which is very concerning to say the least!
But for Councils who don't like rental property usage apart from on single AST households then ICTB is a very effective way to get rid of such rental properties.
Hi Paul, whats ICTB? I am being targetted because I am a landlord and the council tax office had highlighted this to their staff. I had called them last friday and this guy literally said you have many properties. we know all about you. Very strange. I only let one house and the other belong to my mum and i live in my house. So be careful who you talk to and best not to call or email them.
@SI
ICTB----- INDIVIDUAL COUNCIL TAX BANDING.
I doubt with your particular circumstances you have anything to concern yourself with.
The big risk is that the Council refer your property to the VOA who appear to be a law unto themselves liable to apply ICTB to any property with separate AST.
Which is why if you keep below 5 occupiers you shouldn't pop up on the VOA radar.
Licencable HMO are being targeted for ICTB.
The rule is DON'T improve the facilities at your HMO due to the risk of ICTB being imposed
Just a bedroom with an en-suite can result in the LL being clobbered for ICTB.
Very risky.
The VOA doesn't apply it's ICTB coherently across the country.
So a LL with HMO en-suites will get clobbered in one part of the country and yet won't in another part.
I was just raising a potential paranoid situation on my part that Councils would revalue every CT bill at any rental property where there was a shared property with individual AST.
They might even try it for lodgers.
My paranoia knows no bounds when it comes to greedy grasping councils who seek to screw every single penny they can out of the PRS even including homeowners with lodgers!!
I personally use different SIMs when speaking to the Council officers anonymously so that the number can never be ascribed to me when I do call identifying myself from my normal number.
The VOA has no consistent policy which is why I wouldn't go anywhere near any Licencable HMO situation.
I don't trust Councils one little bit which is why I am a bit paranoid about the risks of ICTB which could severely upset a rental business model!!
you are right in not trusting them. however, in banes, when you call council tax office, they wont talk to you unless you got an address or account number to refer to. I had to deal with them quite a lot because with chinese students, they refused to grant exemption allowed by the law and i had to constantly battle to get my money back. They had my account and automatically deduct payment every month and as i dont check my account as not expecting anything to be taken out , they had taken two whole year payment and i had a very difficult time trying to claw back my money but eventually did when someone reasonable on their side finally sort it out for me. i just cant believe they had to make it so difficult even denying having the student list 2 years back. luckily the latest person i talk too is reasonable and did the exemption which at least 3 other colleagues refused!! all because i pay council ta
Get out of b2l and go the commercial route. Freehold property at £100k and then lease out for say 10 years on Fully Repairing basis at say 10% yeald.
I see many empty retail units.
Commercial has no future.
There are far too many retail units.
Finance is awkward which is why we all chose the BTL route which was great until S24 came along!!!😢
@SI
I pay any CT bill by credit card which I always arrange to be a day after the CC statement date.
I always pay manually every month.
Never will I allow CT DD.
It is a very simple process to diarise manual payment.
You also have up to a month from the payment due date before you are considered to be in CT arrears
I have been paying all my CT bills by credit card since the charge for using a credit card was removed.
Using credit cards greatly facilitates cash flow and I also get cashback!!!
I even pay all my mortgages on credit cards.
Of course as per the Martin Lewis exhortation I always pay the statement balance in full by the due by payment date.............................therefore NO interest charges!
Using OPM for cashflow issues is very useful.
I also pay CT bills over a 12 month period.
But I agree with you that CT can be a pain to deal with especially if you have exempt tenants etc.
Dealing with Council bureaucracy particularly when they deal with LL is always going to be a load of hassle.
Principally because they hate LL and we hate them!!
CT is a con.
Councils steal your money.
Go Commercial in the right location. Sell all your B2Ls put money into commercial and dont just think shops think outside the box look at areas and see whats missing business wise. Be smart.
S
@ S I
Certain mortgage companies give mortgages to HMOs. So there is no need to let individual rooms and impair your mortgage conditions.
I had to let individual room as i missed the student deadline and there are lack of requirement for whole house for a 4 bedroom house.
A lot of people like me bought into property thirty years ago when we stopped work or became unemployable for one of many reasons. Thirty years later we are getting old and we can spend some or all of our savings knowing that we will never need cash again in the not to distant future. Commentators and petty politicos need to take that on board because it means that a lot of rental properties will come on the market for that reason and no other.
You make a very important point about LL demographics.
I don't believe it has occured to the PTB that at a certain timeline LL will wish to sell up.
That time is about now hastened on by S24 etc.
I am hoping there will be mass homelessness to rub the Govt's nose into their failed political anti-LL ideology.
There is going to come a point where landlords give up and leave the councils with vast slums to clear up. This will happen if landlords sell cheaply to buyers who really can not afford to run a house on their own. A let house is no different to a shop. It is just a profit centre. We are starting to see property ownership move to limited companies which can go bust without paying their debts. Is this really what councils want? It is what they are going to get if they carry on as they are doing.
Remember only 25% of LL are mortgaged sole traders..25% are incorporated.
50% are unencumbered LL who maybe sole traders or corporates.
It is really the 25% of mortgaged sole traders that are leaving the PRS.
That is still a very significant percentage.
Removing that rental stock from the market will cause significant homelessness.
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