Over the last few months, we’ve seen a significant increase in enquiries from landlords looking to sell one or more of their investment properties. Figures from the last three months show a 31 per cent increase on pre-pandemic levels.
The drivers for this growth in enquiries are varied and, as ever, the property investment market remains a complicated picture. However, there are common stories that we hear from investors time and time again that can offer insight into the state of the buy-to-let market.
Landlords have taken a real hammering over recent years. Increased red tape, taxation and increased costs have all had an impact on the bottom line. Recent research by Hamptons suggests stamp duty and tax changes have resulted in landlords buying 250,000 fewer homes since 2016, and now we’re seeing an increase in those looking to sell.
The assault on investors began a few years ago, so why are sale enquiry levels higher now than pre-Covid?
When it comes to the sudden influx of landlord enquiries, the main driver seems to be pent-up demand from investors who would have sold over the past 15 months but have been unable to do so due to the Coronavirus Act 2020 regulations.
In general, the landlords we speak to are still unsure of the current guidelines. Many had assumed, after seeing media coverage about the ‘end’ of the eviction ban on 1st June, that regulations had returned to normal at that point. The reality, however, was not quite that simple.
What 1st June really meant for buy-to-let investors was a relaxation of the restrictions, rather than a full return to pre-pandemic rules.
A lack of clarity around these changes has led to a great deal of confusion, especially for smaller-scale investors. A recent study by Quick Move Now found that only 25 per cent of landlords felt they had a good understanding of the current regulations, while 25 per cent of respondents felt they had no real understanding of the current regulations and the remaining 50% reported feeling confused about what they can and cannot do.
What’s next for landlords?
The Coronavirus Act 2020 was, for many landlords, the last in a long list of attacks on the viability and profitability of their investment portfolio. Buy-to-let investors around the UK find themselves faced with a difficult dilemma – do they sell up and invest elsewhere, or stay in the private rental sector, accepting that it has become a significantly less attractive prospect in recent years?