Landlords’ confidence in the buy to let sector is falling as a result of a series of tax reforms and weakening house prices, according to a new survey.
Research by Kent Reliance for their Buy to Let Britain survey found that just 41% of landlords are confident about the future of their portfolios following the introduction of Section 24 and increases to Stamp Duty.
Confidence is down from 44% in the last quarter and has fallen significantly from the 67% recorded by the survey in 2014. The fall in confidence appears to be mirroring the slowdown in the sector and declining house price growth.
Growth in tenant demand is falling as well, with 27% of landlords saying they saw demand increase in the last three months, down from 39% last year.
Declining confidence amongst landlords is starting to have an impact on the supply side of the market, with the number of investors increasing their portfolios declining. In the first quarter of 2017, the number of landlords expanding their portfolio was slightly larger than the number consolidating. Now, however, 19% say they expect to reduce their portfolio, compared to only 13% who plan to expand.
This is largely down to amateur landlords leaving the sector before they feel the effects of new tax rules.
Andy Golding, chief executive of Kent Reliance, said: “A perfect storm of weakening house prices, higher taxes and lending restrictions have knocked investors’ confidence.
“On top of this, investors are now being buffeted by the winds of political uncertainty following the election, and its impact on the economy. Uncertainty will pass, but the impact of changes to mortgage tax relief and underwriting standards will leave a more indelible mark on the sector.”
The Kent Reliance survey shows that Section 24 and other recent tax and regulatory changes, such as the ban on letting agents’ fees and the cap on tenants’ deposits, are having a profound effect on the UK rental market.
The lack of confidence felt by investors reflects real concern that individual, mostly small, landlords feel in their own financial situation as a result of these changes.
If you’re a landlord worried about how these policy changes will affect your finances, call Landlord Debt Advisory on 0161 222 4311 or go online to landlorddebtadvisory.com.