“Professional landlords are still buying because at this moment in time there’s a bit of uncertainty in the market – they’re able to pick up some houses which they can see there’s value in,” he said. “But the issue is nobody’s really buying family homes or converting houses into HMOs because of the rental yield. Landlords who were buying and helping the private rental sector have slowed up buying because they’re being taxed to death.”
Murphy argued the consequences extend beyond the investment market. “You’re creating a high tax environment which always throughout history creates a low growth environment – it just goes hand in hand. Landlords can’t keep being taxed to death, and that’s a problem because we have less of a private rental sector and that increases rents.”
A market that has become more selective
Louis Mason (pictured top), director at Oportfolio Mortgages in London, said borrower confidence should not be confused with weakness – rather, the nature of demand has changed fundamentally.
“The days of investors buying almost any property, putting some money into it, and expecting strong capital growth and rental returns are gone,” he said. “Higher mortgage rates, increased taxation and tighter regulation mean landlords are absolutely scrutinising deals much more carefully.”
Mason said experienced investors remain active but are concentrating their attention on assets that genuinely stack up from a yield and cash flow perspective. “The buy-to-let market hasn’t disappeared, it’s simply become much more professional.”