Research reveals landlords are selling more than buying, leading to a supply crisis in the private rental sector despite high tenant demand.
How to completely screwup a critical industry, by failing to think long-term - volume 759.
As tenant demand hits an all-time high, landlords are packing their bags and leaving the rental market. According to a recent study by research consultancy BVA-BDRC, landlords are selling properties at over double the rate they're buying.
In Q2 2023, a whopping 12% of landlords in England and Wales sold properties, while a mere 5% made purchases. The plot thickens when we learn that a record 37% of landlords plan to reduce their property portfolio in the coming year. Meanwhile, just 8% plan to add to their collection of rental properties.
So, what's causing this exodus? Well, it's a cocktail of rising mortgage costs, proposed reforms for the private rented sector (PRS), and a dash of uncertainty. The National Residential Landlords Association (NRLA) warns that without a swift intervention from the Government, this rental property supply crisis will only deepen.
The NRLA is calling for a U-turn on tax changes that discourage landlords from investing in the private rental market. Top of the list is the 3% stamp duty levy on rental property purchases and the restriction on mortgage interest relief on long-term rentals.
Ben Beadle, NRLA's Chief Executive, didn't mince his words: "Whilst the Chancellor has developed a mortgage charter to help homeowners, the lack of assistance for renters and their landlords is clear for all to see."
He added, "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." Beadle concluded by calling the current tax system "frankly absurd" for punishing landlords providing much-needed homes while favouring holiday lets.
It's a classic case of supply and demand imbalance. As tenant demand continues to soar, it seems landlords are not quite ready to play ball. Will the Government step up to the plate? Only time will tell - but my money's not on the current lot improving anytime soon.
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