Landlords
90% of Landlords blame tax and legislation for plans to exit the market
A new report from the Deposit Protection Service (DPS) has shed light on the increasing number of landlords planning to exit the private rental sector. The study reveals that nearly 90% of landlords cite tax burdens and legislative changes as key reasons for selling up, with rising costs and declining returns adding to the pressure.
Tax and legislation driving decisions
The DPS report highlights how changes to the legislative and tax landscape are reshaping the decisions of landlords across the UK. Matt Trevett, Managing Director at the DPS, commented: “Our report shows that the legislative and taxation landscapes are becoming greater influences on landlords’ thinking, with just under 90% citing laws or tax as a key reason for their intended departure.”
Since May 2024, the proportion of landlords who said their decision to sell stemmed from reduced post-tax returns increased from 72% to 76%. At the same time, concerns about declining property values were noted by 30% of landlords intending to sell, up from 21% earlier this year. However, this figure remains lower than the 40% reported in August 2023, suggesting some improvement in property value perceptions.
Shifting concerns over mortgage costs
While the cost of buy-to-let mortgages remains a concern, the report indicates it is becoming less of a priority for landlords. In the latest survey, 46% of respondents expressed worries about mortgage costs, compared to 51% in May and 58% in August 2023.
Other rising expenses, such as the cost of building materials, have been identified as significant factors influencing decisions. Trevett added:
“Rising materials costs — which have a direct impact on property maintenance prices — and the cost of buy-to-let mortgages are also affecting respondents’ plans.”
The report also found that 24% of landlords plan to sell all their properties within the next two years, up from 20% in May 2024. Meanwhile, the percentage of landlords intending to sell just a portion of their portfolios has dropped to 23%, a 6% decrease since May.
Landlords’ evolving role
The DPS study also explored how landlords entered the rental market. It found that 61% purchased their properties specifically to rent, while 30% had either inherited the property or initially bought it as their primary residence. Most landlords (57%) owned one or two rental properties, with 38% managing between three and ten.
Interestingly, 57% of landlords said rental income wasn’t their primary source of income, while 35% relied on it as a significant part of their earnings.
The findings paint a complex picture of the UK’s private rental sector. Challenges such as tax burdens and rising costs are pushing some landlords to reconsider their investments.
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Alasdair says he will eventually downsize his portfolio and plans to put 20-30 properties on the market in the next 12 months.
He says: “It was such a simple process with a great team who are always on the ball and keep you up-to-date on everything.
“The best thing for me was the ease of the sale, and I still got the rental income until the day of the sale.”
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