Landlord exodus ‘higher than anticipated’, says agency group boss

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Antony Lark, co-chief executive officer of real estate brokerage and lettings group Spicerhart, said the market was witnessing major change, with many landlords pulling out due to regulatory pressures, increased tax obligations and the repeal of mortgage relief.

Lark says rents are beginning to stabilize, despite a wave of landlords exiting the industry and resisting rent cuts.

He explained: “We’re seeing a higher turnover of landlords than we expected, particularly those who are retiring, needing money to cover rising living costs, helping their children buy their first home or worried about inheritance tax.”

“This exodus opens the door to investors building rental housing and younger landlords under the age of 40, who now make up a much larger proportion of the landlord population than in the past decade.

“New landlords entering the market are likely to buy in higher-yielding areas further north, such as Stoke-on-Trent and Crewe, where small investments can earn yields of up to 9 per cent and allow them to spread risk across a larger portfolio.”

Mr Lark added: “With rents increasing 6.6% last year and 10% a year ago, one might think rents will continue to rise.

“Rather, while there is a strong demand for rental properties, demand is beginning to plateau as we reach a crisis point in terms of what tenants are willing to pay.”

In some parts of the country, landlords are being forced to lower prices to ensure their properties stay rented, Lark said.

“But many landlords, especially those who have had to refinance their mortgages or have seen costs increase, are resisting these offers of lower prices,” he said.

Lark said the positive outcome has been a reduction in unscrupulous landlords or those unwilling to comply with tougher licensing and regulatory requirements, which has contributed to a more professional and trustworthy rental market.

He added that the New Labour government’s approach to the rental market was a topic of great interest and importance.

“The focus on keeping tenants safe through strict regulatory measures and licensing is widely welcomed by professional real estate agents, but policies that encourage investment in the property market are also crucially needed,” Mr Lark said.

“We support a Labour government’s regulatory measures to keep tenants safe and the licensing system will help with this,” he added.

“However, the biggest impact will come from reviewing the withdrawal of mortgage tax relief on buy-to-let properties (BTL). Such a change in monetary policy will bring much-needed growth to the market.”

Mr Lark also said he wanted clarity on changes to tax liability, the abolition of stamp duty on second homes to encourage investment in rental property, tax relief for landlords whose rental income has pushed them into higher tax rates and guarantees on rent caps.

“A Labor government has a golden opportunity to resolve issues within the rental market and remove uncertainty around the potential impact of a Tenants’ Bill of Rights,” he said.

“Clear and consistent regulation will enable landlords to plan and manage their portfolios more effectively, ensuring an adequate supply of rental properties in the market and helping to restore stability to the market.”