Almost 40% of “disillusioned landlords” are eyeing an exit from the buy-to-let (BTL) market in the next five years, as survey results reveal there are far more investors gearing up to sell properties than buy.
The latest Landlord Trends report covering the first three months of the year, conducted by Pegasus Insight, points to an increased risk of rental property shortage, as 37% of those surveyed said they plan to shrink their portfolios. This is almost double the proportion planning to sell during the same quarter three years ago.
Meanwhile, just 6% said they plan to buy another BTL over the same period, down from 18% in Q1 2022.
Less than a quarter of landlords said they have no plans to sell a BTL.
Sales activity outpaces purchasing
According to Pegasus insight, recent sales activity is now running at almost four times the level of recent purchases; 22% have sold a property in the last year, while just 6% have bought.
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More highly leveraged landlords with four or more BTL mortgages were the most active, with 11% buying a property in the last 12 months and 31% selling.
While most investors bought a new property bought from another landlord (58%), those selling predominantly sold to owner-occupiers (67%), particularly first-time buyers (31%).
Mark Long, founder and director of Pegasus Insight, said: “These results suggest a large cohort of disillusioned landlords, worried about the future of the sector and further demands the government might place on them.
“Our research confirms that many landlords are deeply concerned about the impact of the Renters’ Rights Bill, energy-efficiency requirements and a potential hike in capital gains tax on buy-to-let property.
“The fact that so many feel impelled to sell up despite the underlying health of this market is particularly galling.”
PRS stock predicted to fall
Long says a proportion of the intended sales will be down to “selective pruning” by larger landlords, which is picked up by other property investors.
However, he adds that there’s no doubt volumes of private rented homes will fall in the next 12 months.
Long added: “And as supply falls while demand remains strong, rents will inevitably rise yet further, hurting tenants. The government must wake up to the dangers of a shrinking PRS and change its approach to the landlords who provide homes for 19% of the UK’s population.
“Now is the time for policymakers to consult with the industry on ways to support landlords and encourage further investment in the PRS, before it is too late.”
If you are interested in keeping up to speed with the BTL sector, you can register for the Buy to Let Event here. There are events across the country in Salford, Birmingham, London and Cardiff.
