Landlords’ confidence in investment prospects for the buy to let (BTL) sector "has collapsed", according to the CEO of the National Landlords Association (NLA). 

In a shock announcement that could have widespread repercussions for the UK residential property market, Richard Lambert, Chief Executive Officer of the NLA, told delegates at the Building Societies Association’s (BSA) annual meeting that "confidence in landlords’ business expectations has tumbled by more than a third over the past year – down from 67% to an all-time low of 43%.”

The current level of confidence in the BTL sector is now 5% lower than from the levels witnessed after the financial crash in 2007. 

Mr Lambert stated that the actions taken by the Chancellor George Osborne in last year’s Summer Budget and Autumn Statements has led the NLA to reverse its previous prediction of the continued growth of the private rented sector (PRS) by another million more households over the next five years. 

It now forecasts that, if landlords follow through on their intentions, there will be a dramatic sell-off of up to 500,000 properties in the next 12 months, followed by another 100,000 sold each year to 2021. 

The conclusions are drawn from the latest NLA Quarterly Landlord Panel survey, which will show:

• The proportion of landlords looking to sell in next 12 months has more than doubled since July 2015 (up from seven per cent to 19 per cent).
• Over the next few years:
• 28 per cent of landlords don’t plan purchase any more properties
• 10 per cent plan to reduce their portfolio
• Five per cent plan to sell up completely.

Mr Lambert said: “Two speeches from the Chancellor in 2015 have led to a crisis in confidence greater than when all but a few BTL products were immediately withdrawn from the market following the 2007 financial crash.

“Up to half a million properties could come onto the market as a result of the Summer Budget and Autumn Statement, which the Chancellor will no doubt deem a success.

“We’ve always said that Mr Osborne is blinded to the impact of his decisions by his commitment to homeownership.  He may have intended to focus on the small-scale part-time investor, but it’s the larger and more professional landlords who will be hit worst by cuts to mortgage tax relief and increases to stamp duty, and who appear most likely to leave the sector.

“What happens to the people these landlords house if they still can’t buy and there are fewer and fewer properties available to rent?”

Unsurprisingly these blunt comments from the CEO of the NLA have provoked a prompt reaction within the buy-to-let property sector and Steve Bolton a well known private landlord who along with Chris Cooper is challenging the government over its controversial tax proposals via a Judicial Review said: "In addition to the large numbers of landlords expected to exit the market, those that are not selling up are having to consider (or are already) putting up their rents far more aggressively than in the past.  

"The expected decline in the number of houses available to rent due to landlords selling up, combined with landlords having bigger tax bills and mortgage interest payments increasing once (interest) rates start rising, is creating "perfect storm" conditions for the UK housing market.  Government policy over the last 12 months is fundamentally flawed and I believe in some instances that it is also unlawful."