"BTL is a robust market and while the impact of cost pressures and wider regulatory changes is apparent, we are still seeing a healthy proportion of landlords riding out the wave and expanding their portfolios"
- Ryan Etchells - Together
Rising taxes such as Capital Gains Tax, and expenses caused by new governmental regulations such as the Renters Reform Bill may be causing landlords with smaller portfolios to sell some of their properties, or exit the market completely.
New research from Together revealed that 12% of buy-to-let landlords will be offloading properties this year, with 11% planning to exit the market altogether. 8% of BTL landlords admit they don't foresee any opportunities in the next 12 months and will pause their investment activity and wider property plans.
This is despite the BTL market having had a very healthy year in 2024. Indeed, UK Finance data indicates that the number of buy-to-let mortgages granted in Q4 was up by a staggering 39% compared to the same period in the previous year, and the total value was up 47%.
When asked what the main drivers were for their exiting the BTL market this year, soon-to-be ex landlords cited three main reasons. 14% pointed to the Capital Gains Tax Burden, 12% said rising interest rates were to blame and 8% cited the headaches caused by the Renters Reform Bill as the main reason they were shutting up shop.
However, despite the tenth of landlords planning to reduce their portfolio this year, 29% are planning to expand or diversify. This shows that the market remains healthy under the surface, albeit within a climate which favours landlords with larger portfolios and a level of liquidity allowing them to cope with cost pressures in the form of tax raises and expenses.
The research also shows the challenges which persist for those planning to remain in the BTL market. When asked what they consider the biggest challenges over the next 12 months, 17% of landlords pointed to the rising cost of building materials. 16% cited competition from overseas investors as well as further BTL policy change from the Labour government. 15% of landlords consider stamp duty increases as among the biggest challenges, and a further 15% feel the same for safety standards.
"BTL is a robust market and while the impact of cost pressures and wider regulatory changes is apparent, we are still seeing a healthy proportion of landlords riding out the wave and expanding their portfolios," explained Together's chief commercial officer, Ryan Etchells.
He added, "There will likely be some smaller or amateur landlords who decide to sell off investments or exit completely, but in their position we are already seeing larger, professional landlords stepping in to seize diversified opportunities,"
Etchells concluded, "Until the final outcome of the Renters Reform Bill is known, there may be a bit more volatility as landlords assess the cost impact to them and their property plans this year. But, on the whole it's a changing of the guard rather than a mass exodus. A combination of more flexible BTL regulations and an agile lending sector can help landlords to manage their portfolios and ensure they are able to leverage all available opportunities - something the specialist sector is in a prime position to do."
