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Large landlords looking to exit: Irwin Mitchell

  • 11/10/2017
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Large landlords looking to exit: Irwin Mitchell
Law firm Irwin Mitchell Private Wealth has reported seeing an increase in the number of landlords with “significant property portfolios” looking to downsize.

The firm pointed to a succession of changes by the government which have made life tougher for buy-to-let landlords as being drivers for this apparent exodus, ranging from tougher underwriting standards implemented by the Prudential Regulation Authority to the introduction of the additional 3% Stamp Duty charged on second homes.

Jeremy Raj, partner at Irwin Mitchell, said it was “understandable” that landlords were now considering alternative investments, adding: “We’ve certainly seen an increase in enquiries from landlords worried about the future market.”

Last month the Royal Institute of Chartered Surveyors quizzed its members on what they expected to happen in the rental market over the next year, with 61% suggesting landlords will look to leave, compared to just 12% feeling there will be a greater number of entrants. Looking over the longer term, more than half (52%) felt there would be a net reduction in the number of landlords.


Not straight forward

Nonetheless, disposing of buy-to-let portfolios is not as straightforward as some landlords seem to think, according to Irwin Mitchell, which warned that those with larger portfolios may find themselves under the spotlight of HMRC.

Raj said: “The capital gains tax liability that will crystallise on each property sale must be factored in when weighing up whether it is best for landlords to divest of their property portfolio.

“Any restructuring of a portfolio should factor in the overall tax implications and a comparison of the costs of alternative investments, for which legal advice should be taken. It is easy to overreact to the recent negative signals, but existing portfolios can continue to produce good income and capital growth, and in a low-interest environment with significant geo-political uncertainties, many of the attractions of bricks and mortar remain.”

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