A think tank has claimed that there’s been almost no reduction in the number of landlords in the buy to let sector. With media outlets reporting on a ‘mass exodus’ of landlords over the past eighteen months, have landlords been selling up?
In its new report, the think tank Resolution Foundation claims there’s been as little as a 1% reduction in the number of landlords in the buy to let sector since mid-2019. Furthermore, rent levels for new tenancies have grown by 15% on average since January 2022.
It goes on to say that the number of families renting has almost doubled since the late 1990s, from 11% to nearly 20%. Furthermore, the number of “older” renters has increased, meaning it’s not just students and people in their 20s looking for suitable housing.
Despite this positive outlook, the report falls short; its dismissal of the impact of rising interest rates and the sharp increases in the costs of running a buy to let property as “scare stories” fails to acknowledge the true challenges the industry has faced over the past eighteen months.
Chief executive of the National Residential Landlords Association, Ben Beadle, comments:
“The impact of rising interest rates and tax increases should not be downplayed. 82% of buy to let loans are interest only, and the number of buy-to-let mortgages in arrears more than doubled in the final quarter of 2023 compared to the year before. The Institute for Fiscal Studies has said that: “the more harshly that landlords are taxed, the higher rents will be”.
“Ultimately, a healthy rental market is one in which there is a supply of rented housing to meet ever-growing demand. Ministers need to act to support the sector by developing pro-growth tax measures to deliver this.”
What this report means
It’s positive to see that despite volatility in the property market and the wider economy, buy to let landlords have weathered the storm. However, this is not to say that the past eighteen months have been challenge-free. Many property investors have seen mortgage payments rise and legislation toughen, making it harder to be a landlord.
With the first Bank of England Base Rate (BBR) decrease expected as early as June, many feel that we’re out of the woods, so to speak. We expect mortgage interest rates to reduce; however, it’s important to note that a drop in BBR will not cause mortgage rates to come down significantly, as most lenders rely on SWAP rates to price their products, not the Base Rate.
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What next?
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