Several recent studies are producing evidence that the number of buy-to-let landlords quitting the sector is on the rise, despite equally credible evidence that tenant demand is rising.
Growth in the buy-to-let sector is said to be declining now as a result of private landlords reacting to the raft of tax, mortgage finance and tenancy regulatory changes introduced by recent government action.
There’s only one consequence of all this in the short-term, it would seem; that is, rent rises. Tenants are the losers in all this and those landlords determined to “stick it out” could be long-term gainers.
Surveys asked of letting agents are reporting the rise in the number of landlords selling up in April. According to ARLA Propertymark’s latest available PRS report, the number of landlords leaving the BTL market has increased from four per branch in their March survey to five per branch in April. This figure is the highest level since PRS records began in 2015.
The resultant growing gap between supply and demand is being reflected in ARLA Propertymark’s findings. These show that on average, letting agents registered 72 prospective tenants per branch in April, compared to just 66 in March. ARLA’s research also shows that the number of tenants experiencing rent rises increased to 26% in April.
David Cox, ARLA Propertymark’s Chief Executive has said:
“The barrage of legislative changes landlords have faced over the past few years, combined with political uncertainty has meant the BTL market is becoming increasingly unattractive to investors. Landlords are either hiking rents for tenants or choosing to exit the market altogether to avoid facing the increased costs incurred.
“This in turn is hitting renters most, at a time when a huge number of people rely on the rented sector, and leaves us with the question of where will these people find alternative homes?
“As demand for private rented homes massively continues to outstrip supply, the Government can no longer divert its attention from the broken housing market. The recent news that the Government is regulating the industry is a step in the right direction, but ultimately we just need more homes.”
According to a recent report produced by finance company Kent Reliance, “In the last decade, two million fewer first-time buyers have been able to buy with a mortgage than in the 10 years prior to 2008. Over the same period, the PRS has grown by 2.2 million households, accommodating frustrated buyers. This fundamental support for rental demand has not changed, as first-time buyers continue to struggle with affordability issues, high house prices and insufficient housebuilding.”
Andy Golding, chief executive of Rent Leliance’s OneSavings Bank has said:
“Political opinion may be set against the PRS, but without it, the housing crisis would be deeper still. First-time buyer numbers, despite recent fanfare, are a long way from pre-recession levels and with household numbers growing, and new housing starts inadequate, it is the PRS that will continue to pick up the slack.”