The proportion of landlords intending to sell their property has risen in the last year, new research reveals. As the legal challenge to the UK government’s planned tax grab continues, we map the areas where the most landlords are weighing up a buy-to-let exit.
The proportion of landlords intending to sell their property has risen in the last year, new research reveals.
While the UK continues to debate the possibility of a Brexit this June, next April could see an equally dramatic exit impact the real estate market: the exit of landlords from the buy-to-let sector.
The change in mood surrounding UK buy-to-let property has been driven by a string of measures announced by the government. Following a 3 per cent Stamp Duty surcharge for second homes introduced this month, the government also plans to restrict mortgage interest tax relief, which will leave landlords paying tax on the rental income they earn rather than their actual profits.
Many will be worse off, with some basic rate tax payers forced into a higher tax bracket as a result and higher and additional-rate payers facing considerably bigger tax bills.
A group of landlords, led by Platinum Property Partners’ Steve Bolton and fellow landlord Chris Cooper, are challenging the move. Earlier this year, they filed an application for a judicial review of the Finance Act 2015 – announced during last year’s Budget – and are now waiting for the court to rule whether they have permission to proceed to a full hearing.
“With the facts at hand, we are confident that we will have the chance to fight our case in court,” explain the campaign team. “Our hearing, if granted, is expected to happen this autumn, which gives us time to launch subsequent fundraising campaigns and prepare the best possible legal case.”
While buy-to-let investors may see their profits unfairly erased, though, the wider housing market would also be impacted by the changes, should they come into effect, with landlords either forced to raise rents to cover the additional costs or sell up their property altogether.
According to the National Landlords Association, the proportion of landlords in London considering selling up has quadrupled in recent months, with 19 per cent planning to sell in January 2016 – up from 4 per cent before the 2015 Budget.
The 15 per cent increase in intention to sell property is the highest witnessed across the UK over the last six months, with the North East seeing the smallest increase compared to other regions of the UK, rising from 17 per cent to 24 per cent.
“If landlords follow through with their intentions over the coming months this could lead to a massive sale of property, as we have previously warned,” comments Richard Lambert, Chief Executive Officer of the NLA. “However, this may not be a straightforward process, especially for those with stock in low demand areas.”
To see which area of the UK would be affected the most by the exit of landlords from the buy-to-let sector, navigate the map below.