- Sellers will outnumber buyers over the next two years
- But nearly one in 10 who have never been a landlord are considering taking the plunge
Nearly a million landlords plan to review their buy-to-let portfolios over the next two years with the number planning to sell outnumbering those planning to buy more properties, new research from the Nottingham Building Society suggests.
Its study(1) found nearly two out of five landlords (36%) surveyed will be reviewing their portfolios – the equivalent nationally of around one million(2) landlords – with 20% selling all or some of their portfolio, whilst 16% aim to buy more properties over the next two years.
Regulatory issues are the biggest reason for landlords wanting to sell with more than half of would-be sellers interviewed (52%) blaming increasing regulation in the sector while 24% say the end of tax relief on buy-to-let mortgages is driving them to sell.
The ability to earn a good income from buy-to-let is the main reason for landlords adding properties to their portfolios. Some 83% of those landlords interviewed who plan to buy more properties said this is a key reason for doing so, while 57% believe rising property prices make buy-to-lets a good investment. Around 61% say low interest rates for savings mean property is a better investment.
Tax changes in the buy-to-let sector have been one of the main factors making buy-to-let less attractive for some, including the scrapping of tax relief on mortgage expenses – previously landlords could offset mortgage costs against rental income – and restrictions on Private Residence Relief which reduced the Capital Gains Tax due on homes which people rented out after living in them.
But the research from The Nottingham shows millions who have never been landlords plan to buy a property over the next five years. Some 11% of people surveyed with mortgages on their homes or who own them outright are thinking of becoming landlords in the next five years. Their main reason for potentially investing in buy-to-lets is the low rates available on cash savings – more than half (55%) say they want to put their cash into property to earn a better return while 48% see buy-to-let as a good way to diversify their investments and 42% are confident buy-to-let will generate a good income.
Denise Wells, Head of Mortgage Operations at The Nottingham, said: “Our research suggests sellers currently outnumber buyers in the buy-to-let market with regulatory issues and tax changes among the reasons persuading landlords to pull out of the market.
“However, it remains the case that there are potentially strong returns to be earned in the buy-to-let market and we continue to see landlords buying rental properties whilst our research indicates that many more potential landlords are considering going into the market too.
“Whether landlords are buying or selling it is crucial they get the best possible advice on their finances and source the most competitive mortgages.”
The table below shows the reasons The Nottingham’s survey found as to why landlords are buying and selling.
| LANDLORDS’ REASONS TO SELL | LANDLORDS’ REASONS TO BUY |
| The regulatory environment – 52% | They generate a good income – 83% |
| Personal circumstances – 41% | Cash saving returns are so low – 61% |
| Reduced tax benefits – 24% | Belief that property prices will rise – 57% |
| Problems with tenants during COVID – 21% | It is a good way to diversify – 48% |
| To realise capital growth – 21% | There could be a stock market correction – 9% |
(1) Nottingham Building Society commissioned the consumer research company Consumer Intelligence to interview 983 UK adults who currently own their homes or have mortgages on them. The sample included 147 residential landlords. They were interviewed online between 29th April and 4th May 2021
(2) https://www.hamptons.co.uk/research/articles/2020/lettings-index-january-2020.pdf/
