UK Housing Market
Landlord Exodus: Surge in Rental Properties Sales as Landlords Priced Out
Over 20% of newly listed homes in inner London are former rental properties
Research from TwentyCi has unveiled that the number of rental properties being sold in London has dramatically increased, with over 20% of newly listed homes in inner London being former rentals. This is the highest rate in ten years, up from 15.6% in July 2023. Contributing to this surge includes rising mortgage rates, concerns about potential increases in Capital Gains Tax, and stricter energy efficiency regulations. The rental market has become more expensive for landlords, with this trend coinciding with a significant reduction in available rental properties in the UK, down more than 25% since 2019. In light of this, Cornerstone Tax – the UK’s leading property tax consultancy - has revealed through its own national research that a further 15% of landlords are considering selling up due to rising costs associated with their property.
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20% of landlords became one without the sufficient knowledge needed and have lost thousands as a result
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24% of landlords say that their biggest mental health strain is managing their tenants
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19% of tenants have had to change rental properties five times in less than five years through no fault of their own
The Bank of England’s long battle with inflation beginning in December 2021, has pushed interest rates up from near zero to 5%, as of last month. This has had a particular impact on landlords that took out mortgages on buy-to-let schemes during the era of low interest rates in the 2010s under the assumption that their property would be a safe investment. According to Cornerstone’s data, a staggering 20% of landlords became one without the sufficient knowledge needed and have lost thousands as a result, with average estimates as high as £7500.
David Hannah, Group Chairman of Cornerstone Tax, highlights how the record number of landlords leaving the rental market is contributing to serious problems of supply and demand within the UK’s major cities. Cornerstone’s research states that 19% of tenants have had to change rental properties five times in less than five years through no fault of their own as landlords are forced to either exit the market or pass on these record high mortgage costs onto their tenants. Moreover, as demand continues to outstrip supply within the market, 17% of tenants have also admitted that they have lost out on a property that they wanted to rent in the last two years due to a bidding war.
David Hannah, Group Chairman of Cornerstone Tax, comments:
"Our data highlights a clear issue in the UK's rental market, many of these landlords took out mortgages on buy-to-let schemes during a period of sustained low interest rates; fast forward to 2024 and the pressure currently facing landlords is simply too much. High interest rates and the highest tax burden since the second world war have forced thousands of landlords to sell up, which then puts further pressure on renters due to a lack of stock.
"We are generally seeing an exodus of landlords from the capital and South East, looking towards the North East of England instead. It's a region that's seen the highest growth in property prices in the last twelve months, with many seeing it as a much safer investment than the capital."