Tougher tax rules and red tape have caused two-thirds of landlords to consider investing outside the private rented sector in future.

New research from FJP Investment reveals that the market has lost its appeal for many, with 68% of multiple property owners reporting that buy-to-let investments have become far less attractive during the past five years.

The survey of 1,004 UK landlords and property investors, of which 344 own two or more properties, found that 71% believe they have been unfairly targeted by the government’s tax reforms and new regulations since 2016.

Two thirds (67%) said they would consider other forms of property investment that didn’t incur the same taxation and complexity as buy-to-let and second home purchases.

- Advertisement -

Two fifths

More than two fifths (44%) of landlords said they plan to sell one or more of their properties in 2021 although the same number intend to buy a house or flat this year.

However, confidence is high in regard to house prices; more than half (55%) believe prices will rise in the next 12 months, while 54% expect prices to increase by more than 10% between now and 2026.

CEO Jamie Johnson (pictured) says that although property investors are confident house prices will rise, the added cost and complexity of investing and letting out multiple properties means many are looking for other forms of bricks and mortar investment.

He adds: “With the stamp duty holiday extended until the end of June and the UK inching towards an end to lockdown, the next few months will be critical for the property market. Time will tell if there is indeed a mass exodus of investors from the buy-to-let sector, but this new research underlines the fact that there is far less appetite to be a landlord.”

Read more about selling buy-to-let properties.

10 COMMENTS

  1. The landlords in the survey will be just clients of FJP Investment won’t they? I doubt they are typical landlords in the PRS.

    1004 landlords is quite a small number to draw conclusions as to the future of the PRS and the housing market, and if they are all clients of an investment business I think it would be foolish to use the data as a reliable prediction of the future.

  2. I just pass all the extra costs on to my tenants – the powers that be don’t seem to realise it, but they just keep making renting more expensive!

    • So do I, and have been doing as a property becomes available. I’ve always let at or below the LHA rate, but no longer. I had been letting a 2/3 bed for £450 pcm but now I’m advertising it at £550 pcm. Having said that, I’ve just spent around£4k on upgrades. £10 of the increase is a direct result of the electrical check and having to replace the fuse box in the future.

  3. I have 2 properties. i’m selling one before they put CGT to 40%. LL investment return doesn’t look so good when you factor in inevtiable big ticket items like refurbs, windows, doors, roofs etc. Even paint costs a fortune nowadays.

  4. I’m not surprised landlords are looking to leave the PRS. The final straw for me is that when covid came upon us the govt banned evictions, this was a green light to professional scroungers to stop paying rent. Then when I made enquires as to what covid financial help would be available HMRC simply said that I’m and investor not in trade therefore I am entitled to nothing, that was confirmed by my accountant.
    A mortgage holiday is not a handout its simply debt deferred that term also well publicised on BBC etc also sent out a message that the landlord is getting a mortgage holiday therefore rent holiday is OK.
    I don’t have any mortgages.
    So I am 100% exposed if tenants chose not to pay.
    The govt even brought in the Electrical testing in the middle of the pandemic, personally I’ve had such certification on my property for a decade however many landlords do not. I know my regular electrician is totally inundated at the moment.
    Over the last few years many tax allowances have been removed, EPC certification is only going to get tighter with a gradual move to C for letting by the end of the decade.
    So… If I’m a mere investor then I will find ANY investment vehicle that gives me a reasonable return for a reasonable risk. With PRS the pendulum has swung far into the high-risk category whilst the returns are falling due to govt action.
    I currently have an offer on a property and when it completes, I will NOT re-invest as the risks are too large while the eviction ban remains so that money will stay in the bank or maybe invest in stocks & shares.
    Locally the PRS is already feeling the pain… rents have increased dramatically because there are very few properties available… where there would normally be about 20 x 2 bed properties to let today there is 1, that was listed yesterday… for several days there were no 1 or 2 bed properties at all… with just 3 x 3bed houses that is the total available rentals (4 properties) … that it for a town with a catchment of about 25,000 residents. A 2 bed appeared on the market last week at a very high price and it was off Rightmove in 2 days.
    The way things are going the govt better requisition hundreds of hotels because when people are finally evicted my guess is landlords are going to be very wary about who they let to because they will presume these are the people who have lived rent free for a year and I imagine many Landlords will be reducing their portfolio’s overall having been victims of the govts actions over the last year. Simple maths says the “Technically” homeless (People sleeping on a friends sofa, in Bed & breakfast etc) will only increase.

    • The issue is with AST lettings.

      LL may engage in what are mostly fraudulent short-term lettings.

      These are rarely detectable by lenders and councils etc.

      Also FHL business will increase.

      A FHL which could also work as an AST letting makes far more business sense.

      But there is no doubt that leaving the AST sector makes business sense.

    • My town has a population of around 65,000 and on Rightmove (other online agents are available) there are six x two bed properties and three x three beds. And the rent is considerably higher than pre-covid.

  5. The government does what it does so that landlord’s are forced to sell their property , so increasing housing stock for first time buyers

    • Hi Pradip, I think you might be right that this is the intention the government has, however that just demonstrates their lack of understanding of the PRS. Many tenants simply would never be able to get a mortgage, or a deposit and frankly don’t want to own a house. I just hope at some point the penny drops that without a healthy PRS there will be an increase in homelessness

LEAVE A REPLY

Please enter your comment!
Please enter your name here