This summer, the first warning came in June from the National Landlords Association (NLA), which had estimated that around 380,000 landlords (19% of the total) plan to sell rental properties in the coming year. It also expected that nearly half (45%) of all landlords to offload at least one flat/apartment in the coming year, with 33% looking to sell a terraced home.
Only 7% of landlords who plan to sell this year said they were hoping to sell to other landlords, indicating that more properties will soon become available for first-time buyers and homemovers. Richard Lambert, chief executive of the NLA, said at the time: “These findings sound like positive news for potential new homeowners, but the reality is not everyone wants, or is in a position financially, to buy. In fact, if all these homes are sold as planned then it will lead to a significant fall in the supply of property available to those who choose to rent or have no other option but to rent.”
We are all well aware of the many reasons that some landlords may have for selling – higher stamp duty charges, less tax relief from mortgage interest payments and much more restrictive lending requirements to name just a few. However, BTL mortgage rates are still at historically low levels and new lenders are still entering the market, making the BTL mortgage market more competitive. Also, with the newly raised base rate still at just 0.75%, what else can investors do with their hard earned cash to get a decent return?
Official figures from the Ministry of Housing in August revealed that around 4,000 BTL properties are being sold each month, leading to the first drop in the number of homes available to rent in 18 years (more on that point later). However, this is just over 1% of the NLA estimate so the number of landlords selling would need to increase eight-fold to hit the 380,000 per year mark.
Why aren’t rents rising faster?
The Royal Institution of Chartered Surveyors (RICS) reported on the 10th of August that rental supply continues to fall across the UK as landlords exit the BTL market. It said that 9% more respondents to its survey reported seeing a fall rather than rise in new landlord instructions, which is not a huge imbalance, however it was the eighth consecutive quarter in which this indicator has recorded a negative number.
