Pressure of regulation and taxation also affecting portfolio growth

Nearly half (45%) of landlords say current market conditions are preventing them from growing their portfolios and more than two out of five (42%) say they may reduce their property portfolios, according to the latest findings, from Aldermore’s Buy to Let Index.

Yet nearly half (47%) say their rental yields have risen over the past year, with average increases of 7.2% and nearly one in five (18%) witnessing gains of 10% or more.

Regulatory and tax pressures

Policy and regulatory pressures are the biggest concerns for those who are considering leaving the sector. Of those, 43% cite increased regulation, including the Renters’ Rights Act which came into force on May 1. Meanwhile, 39% blame tax changes and more than half (55%) say increases in tax rates on dividends, property and savings could force them to leave the market.

More than a third (37%) say high maintenance costs are pushing them out, while 30% say they feel unfairly blamed for wider housing system challenges.

Jon Cooper, director of mortgages at Aldermore, said: “What we’re seeing is a clear disconnect in the private rental sector (PRS). Demand from tenants remains strong and landlords are seeing improved yields, but increasing regulation, tax changes and rising costs mean many are hesitant to invest further. It’s vital for the overall health of the PRS that landlords feel confident enough to continue providing a good standard of accommodation, as well as invest in their portfolios.”