Research from ARLA Propertymark suggested there has been a “spike” in landlords looking to exit the market ahead of the tenant fees ban, which comes in on June 1.
It found that in April the average number of landlords exiting the market per letting agent branch increased to five, up from four in March and the highest level seen since May last year.
David Cox, chief executive of the trade body, said this “upsurge” was down to a combination of the tenant fees ban and the proposed scrapping of Section 21 (otherwise known as no-fault evictions) which was “forcing landlords to either increase rents or leave the market altogether”.
It follows a study from the Residential Landlords Association last week which suggested that nearly half of landlords are considering selling up and exiting the market.
Market is diversifying
Paul Flavin, managing director of Zing Mortgages, noted that landlords with four or less properties are starting to question why they are bothering.
“Many that are relatively new to the market face making a loss each year with no real increase in property value to justify the expense.”
He added that his clients that want to continue investing in property are looking to diversify into houses in multiple occupation (HMOs) or purchase in the Midlands or North West rather than the South East, while others are instead focusing on AirBnB as an alternative.
Flavin continued: “I certainly feel there is a future for the buy-to-let market, but it’s definitely becoming more specialised and what landlords are trying to do may require some creativity from specialist lenders.”
Changes not deal-breaking
Andy Wilson, founder of Andy Wilson Financial Services, said that he wrote to all of his clients with only a couple of investment properties in the middle of last year to highlight changes that were coming regarding taxation, funding and regulations “but none were unduly phased by them and accepted the changes as unfortunate but not deal-breaking changes.”
He continued: “I also talk to a number of local estate agents frequently and they have not expressed any strong views that landlords are selling significant amount of stocks; usually these are the lower performing properties where the sale proceeds can be rolled into something more profitable.”
New build student accommodation
Wilson noted that one added aspect for local landlords to consider in his area was the growth of new build student accommodation.
He pointed out that over the last 20 years, thousands of student lets have been built in the Lincoln area.
He said: “They are modern, well-functioning, secure and reasonably attractive, and the landlords with old run down Victorian properties in what was student and bedsit land in Lincoln are now seeing an exodus of students to the newer developments which cater very well for student living.”