Various research surveys ask this question of existing landlords and, whatever the results returned, they tend to be used to force a narrative which suggests the market is seeing large numbers of exits.
Of course, landlords sell properties all the time, and it’s fair to say that relatively recent regulatory and taxation measures have potentially forced the hand of those landlords who might otherwise have hung on to a property for longer.
But, for the most part these tend to be landlords who only own one property, and what the surveys can’t judge is the number of new landlords and property investors coming to market all the time.
I’m often asked to look into a crystal ball that doesn’t exist to give my view on the ‘future of the sector’ and how it’s going to handle this ‘mass exodus’ of existing landlords.
Continued stream of investors
The fact that I’m incredibly bullish about the future of buy-to-let, is much to do with the fact I can point to a significant influx of new landlords to the market. I know because Fleet Mortgages is providing those landlord borrowers with mortgages all the time and we continue to see new ‘first-time landlords’ every single month.
There are other reasons for my confidence, and it comes from the type of individual who is investing in buy-to-let properties for the first time. There’s no disputing that new landlords tend to be much more savvy about investing than those that are exiting.
After all, why wouldn’t you be?
You will know full well that mortgage interest tax relief has been dropped to a minimum level, you will know of the extra three per cent stamp duty surcharge, and you will also know exactly what is going to be required from a property in order to keep it profitable in terms of ongoing rental return and yield, as well as the potential for capital increases.
Otherwise, you’re unlikely to be investing in property at all. And these individuals are using limited companies because they’re aware of the tax advantages, and they are also not putting all their eggs in the property basket, because they tend to come armed with investments in other areas, stocks and shares ISAs, strong pension contributions and the like.
These are not investment novices by any stretch of the imagination and they are recognising that investing in property over the long-term can also help meet their retirement needs or whatever they wish to do with those properties later in life.
Making room for professionalism
So, when I see those surveys about ‘countless’ landlords leaving, I tend to think the number is overblown, and that we do have a more focused landlord community who understand the ‘new normal’ for buy-to-let, and still see the value in that investment.
Whereas many of those leaving have been ‘amateur’ players, who let out a property they couldn’t sell, or were left a property to look after and couldn’t think what else to do with it or became landlords by default rather than design.
Of course, new blood is vital within the private rented sector, as is new property. There is still a shortage of both but the allure of property investment has not changed, it has only intensified and that spells good news for both advisers active in this space and the buy-to-let sector in general.