Landlords stay the course despite stamp duty change – Stanton

While it hasn’t exactly been a helpful move, it’s not quite been the crisis that some had predicted. If anything, it’s been the latest hurdle in the long 30-plus-year history of the BTL sector. 

After all, not only are landlords incredibly thick-skinned, but they are hugely adaptable – switching up their plans and taking the stamp duty change in their stride. In the wake of the Budget announcement, we have seen a wave of landlords still pushing ahead with purchases – but factoring in the stamp duty change into their negotiations.

It’s a sound strategy – especially in a residential market that isn’t exactly firing on all cylinders. While house prices on the whole have remained pretty resilient, we know it’s not the story in all parts of the country. Add in really tough affordability challenges for potential buyers, along with changes to residential stamp duty thresholds, and there isn’t exactly a long line outside every property either. 

We have seen reports in the market of more landlords identifying those sweet spots for investment, as well as heading up North to increase their portfolio and take advantage of a potentially smaller stamp duty bill in the process.

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Undeterred 

As part of our most recent survey, nearly a third of landlords told us that they still intend to purchase properties – undeterred by the change to stamp duty. Among those planning to buy in the next 12 months, the biggest intention came from landlords with portfolios of between four and 10 properties, as well as those with between 11 and 20 properties – 31% each.

What was most encouraging to see, though, was the main reason for pushing ahead with purchases was a desire to build a property portfolio – a view held by more than half of landlords. Given how much mudslinging goes on in the media towards landlords and both the political and economic landscapes landlords have faced in recent years, it’s tremendous to see such resilience.

Perhaps unsurprisingly, nearly two in 10 landlords said it was because of tenant demand, which remains incredibly strong, with hot competition for every rental opportunity. Recent research by Foxtons puts it at an average of 13 applicants for every new instruction.

Staying put 

Of course, intention to buy is only half of the story. For the long-term health and wellbeing of the PRS, we also need to ensure we’re not losing properties and, importantly, landlords out of the market. 

In our most recent survey, the encouraging news is that nearly half of the landlords we surveyed said they have no intention of selling any properties in the next 12 months. Once again, the biggest intention came from those landlords with portfolios of between four and 10 properties – at just over a third. This was closely followed by those with between 11 and 20 properties.

We must say that just over a third do intend to sell some properties. It’s important to note that this is a regular occurrence in a healthy BTL market as landlords evaluate and restructure their portfolios.

However, a proportion did say their plans to sell were due to worries about evicting difficult tenants, in light of the changes planned in the upcoming Renters’ Rights Bill.

Importantly, though, just 1% of landlords surveyed said they intend to sell all of their properties. 

Supporting growth 

Whether it’s expanding or staying put, it is positive news when you consider the critical role private rental accommodation plays in the wider housing mix in the UK.

When one in five households in England and Wales rely on the PRS for housing, we absolutely need to facilitate the growth of the PRS rather than stifle it. After all, it’s not just for those preparing to buy, it’s also for those ‘never buyers’ – the ones who have no intention of buying because it’s at odds with their work or lifestyle. 

As a lender, we do have to control what we can control.

While we may not be able to dictate government policy or taxation, we can make sure we are equipping brokers with a broad range of products at competitive rates to best support their landlord clients. It’s all about using our skills and capabilities to give landlords options and the confidence to enter, stay put or even expand. 

Whether it is competitive rates, identifying gaps in the market for new products or launching our own product transfer proposition, it’s our duty as a BTL lender to have an offering that can help brokers support landlords of all sizes, whether that’s in establishing, expanding or refinancing a successful property portfolio.