New regulations are pushing a considerable percentage of landlords out of the buy-to-let market, according to the lender Together.
Rising taxes such as Capital Gains Tax, and expenses caused by the Renters Reform Bill may be causing landlords with smaller portfolios to sell some propertiesor exit the market completely.
Together’s research revealed 12% of buy-to-let landlords will be offloading properties this year, with 11% planning to exit the market altogether. Some 8% of BTL landlords admit they don’t foresee any opportunities in the next 12 months and will pause their investment activity and wider property plans.
This is despite the BTL market having had what Together claims to have been a very healthy year in 2024.
UK Finance data indicates that the number of buy-to-let mortgages granted in Q4 was up by 39% compared to the same period in the previous year, and the total value was up 47%.
When asked what the main drivers were for their exiting the BTL market this year, soon-to-be ex landlords cited three main reasons. Some 14% pointed to Capital Gains Tax, 12% said rising interest rates were to blame and 8% cited headaches caused by the Renters Reform Bill.
However 29% claim to be planning to expand or diversify.
When asked what they consider the biggest challenges over the next 12 months, 17% of landlords pointed to the rising cost of building materials. Some 16% cited competition from overseas investors as well as further BTL policy change from the Labour government. Another 15% of landlords consider stamp duty increases as among the biggest challenges, and a further 15% feel the same for safety standards.
A spokesperson for Together says: “BTL is a robust market and while the impact of cost pressures and wider regulatory changes is apparent, we are still seeing a healthy proportion of landlords riding out the wave and expanding their portfolios.
“There will likely be some smaller or amateur landlords who decide to sell off investments or exit completely, but in their position we are already seeing larger, professional landlords stepping in to seize diversified opportunities.
“Until the final outcome of the Renters Reform Bill is known, there may be a bit more volatility as landlords assess the cost impact to them and their property plans this year. But, on the whole it’s a changing of the guard rather than a mass exodus.
“A combination of more flexible BTL regulations and an agile lending sector can help landlords to manage their portfolios and ensure they are able to leverage all available opportunities – something the specialist sector is in a prime position to do.”
