Buy to Let

One in five landlords set to flee the market

Nationwide has set up an industry alliance to lobby on behalf of landlords as research shows a fifth could be set to flee the market.

A survey of 1,000 landlords commissioned by the lender’s buy-to-let arm, The Mortgage Works, revealed more than two in five (44 per cent) are now considering hiking rents, while one in five (22 per cent) are thinking of selling their properties.

In addition, 10 per cent are planning to slash maintenance spending and one in seven (14 per cent) plan to start managing the property themselves, instead of using an agent.

The cross-industry Partnership Board has been assembled with the aim of helping landlords provide decent, affordable homes for their tenants.

Backed by the National Landlords Association (NLA), the Association of Residential Letting Agents (Arla), Shelter, Countrywide and The Nationwide Foundation, the group will meet for the first time later this month.

It will monitor the health and development of the private rented sector, discuss issues of mutual concern and provide policy suggestions to government.

TMW’s survey showed landlords have been trying to shield their tenants from the financial impact of the tax and regulation changes, with almost a third (29 per cent) having never increased their rent – but their ability to do so may be reaching its limit.

The buy-to-let sector has been hit hard by 2016’s 3 per cent stamp duty surcharge on additional properties and the gradual phasing out of income tax relief for landlords, which is set to take place by 2020.

A further blow came with the Prudential Regulation Authority’s (PRA) introduction of more stringent affordability rules on 1 January this year, followed by stricter underwriting guidelines for portfolio landlords to be brought in by the end of September.

But The Mortgage Work’s survey showed a third (32 per cent) of those surveyed were unaware of additional stamp duty on second homes, while 36 per cent were unaware of the tax relief changes.

In addition, 43 per cent had not heard of the government consultation on lettings fees being paid by landlords, rather than tenants – which has now been ratified.

The survey, which was carried out by YouGov, revealed the sizeable financial commitment that comes with owning a buy-to-let property, with average annual costs per rental totalling £1,500.

While the mean monthly profit from renting out property, after deducting typical costs, is £610, almost three in five landlords (56 per cent) make £500 or less a month, a third earn less than £300 and 22 per cent less than £200.

One in seven (15 per cent) said they made £100 or less monthly profit from renting out their property – less than £1,200 per year.

Joe Garner, chief executive of Nationwide Building Society, said many landlords played a vital role in providing homes and choice, but were struggling to keep up with an ever-growing list of 
responsibilities. 

He said: “With a draft bill on letting agent fees already in progress, and greater powers for local councils beginning to take effect, it is clear that reappraising the private rental sector is already firmly on the government’s agenda and so we look forward to working with the housing minister to help influence a future that works for all. 

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