This question has been asked as new research shows the number of landlords within the private rented sector has dropped by 8% or approximately 200,000 since 2019.

This reduction has been pinned on the additional stamp duty costs of entering the market and the reduction in mortgage interest relief, all of which have dampened demand for investment property.

And the number of landlords may reduce further, says property firm Barrows and Forrester, as a further 21% say they are considering quitting the market.

“Minister don’t seem to understand that the buy-to-let sector is the backbone of the rental market and fewer landlords means fewer properties and even less affordable rents,” says MD James Forrester.

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Exodus

His research also highlights how a mass-market exodus could be on the cards ahead of a potential increase in capital gains tax.

But for landlords who have stuck around, returns have been improving; the average value of a property portfolio has increased by £38,820 to £491,234 since 2019.

The largest uplift has been in the SW of England where average portfolio values has risen by £49,000, approximately £10,000 more than anywhere else.

Barrow and Foster says these increases have been driven largely by the stamp duty holiday, which has seen a surge in demand for properties in both the general and buy-to-let sectors, leading to competition and higher offers.

“However, true to form, it seems as though the government will do their best to spoil the party with an increase in capital gains tax via next month’s budget,” says Forrester (pictured).

“This is quite astounding given the string of changes already implemented to stamp duty tax thresholds and tax relief and the impact it has had on landlord numbers.”

Read more about capital gains tax.

7 COMMENTS

  1. CGT rises may not cause a huge exodus of LLs from the market but rental properties being required to achieve an EPC rating of C will. The entire EPC assessment is flawed and unfair – trying to gain the required standard is like throwing darts at a moving target, blindfolded!

    Please sign my petition if you agree:

    https://petition.parliament.uk/petitions/559700

  2. Tricia is 100% correct. A grade D is achievable, just, on an older property but not a C. We have tenants who stay many many years and it cannot be the intention to uproot families so that for example the flooring comes up to put insulation below floor level. Off-grid LPG is the only viable solution but it is marked down unreasonably hard. The fact that it is evidences the Government’s ignorance as to energy saving. LPG is a by product of petroleum manufacture; there is a surplus of it, so much so that most of it is just flared off. It os better that it is put to worthwhile use than just burnt off to get rid of it.

    • Two of my properties are old Vic terraces, currently rated D. To increase them to C would be a huge expense and disruption. In all likelihood, a budget capped at the proposed £10k would only achieve an increase from a low D to a higher D. This amounts to an annual energy saving for the tenant of around £100 per year! It does not make economic sense with a payback of 100 years.

      There is no perspective. Properties with EPCs below official levels are described as cold and damp surrounded by the narrative that landlords should not be offering such properties and if we do we are in some way exposing tenants to sub-standard conditions when, in fact, a D or even E rated property is still comfortable and warm and may cost an extra two or three quid a week to heat. And it will cost my tenant more than a couple of quid a week in increased rent in order for me to recoup the cost of the works.

  3. Taxing landlords to the hilt until the pips squeak and more, will never ever lose any government votes. With the current situation don’t expect anything but a cash cow milking exercise of epic proportions.

  4. As a landlord I’m feeling very put off with the rental market. EICRs on 7 year old flats have required upto £1000 to get satisfied. The terrace houses I own which are now due to have EICR certificates will definitely fail and need expensive rewiring due to their age, despite being in good condition inside and out. Landlord licenses have been costly too. Tenants not paying and not being able to evict either. It’s my only income. Now with the upcoming expectancy to bring the EPC upto a C, which in a 1920’s terrace if you rip up concrete floors and insulate plus insulate walls, put solar panels on roof and even this only equates to a D. I’m a good landlord and jump to sort out every issue within a day, but now very jaded as I’m sure a lot of others are too.

  5. Agree with the above comments. I have to sell off several properties as the new EPC targets make them unviable to let. Tenants will be served notice & those properties will not be bought by landlords as they know the scandal of the epc. Also it’s absolutely crazy that owner occupiers have no such epc targets thrust on them. Do they not cause pollution then? Of course they do. It’s just a joke.

  6. I’m not surprised landlords are leaving the PRS, over the last few years the govt have increased the burdens at every turn whilst local authorities view landlords as public enemy number one.

    For me the final score came when HMRC told me that I am not in business I am an investor therefore entitled to zero covid help at all.

    I have sold properties that are below C and I’m currently expecting to complete the sale of another property in a few week’s time and 100% until the eviction ban is not just lifted but it is completely finished, I will not re-invest in the PRS I’d rather have the money just sit in the bank than risk getting stuck with a non paying tenant.
    In the mean time I’m now looking for alternative investment vehicles away from PRS.

    With the rise in online shopping and the demise of the High st the govt will want landlords to step in and bring many of those properties back into the PRS…. Well, all I can say is “Good luck with that one” because no landlord in their right mind is going to touch old properties that will need huge amounts of work to meet future EPC’s plus hey Rishi… You just ignored us for the entire Covid crisis so don’t be surprised when “Investors” ignore you.

    There is already a shortage of rental properties and higher rents in my locality but no way will I purchase any more property unless or until the govt get the landlord/tenant balance back on track and improve the risk/reward basis for investment in the PRS.

    The govt better buy out Travelodge altogether because very soon there will be many homeless as landlords sell up and leave the PRS.
    20 years ago the govt stepped away from council housing and the PRS took up the slack. The govt reward for all that effort is to slap landlords across the face…
    Thanks a lot….

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