With asking prices for rents at a new record, more landlords are planning to raise their investment in the sector than quit.
A third of landlords are planning to increase their portfolios. However, a quarter of landlords are planning to reduce them.
There is already a shortage of new rental stock, Rightmove reported this morning.
It said that tax changes are deterring both new and existing landlords.
Rightmove also cited as deterrents the Stamp Duty surcharge on the purchase of second homes and the ban on tenants fees which some agents may be passing on to landlords.
Coupled with strong demand from tenants, there are record asking rents across all parts of Britain except for Scotland and the north east.
Rightmove said there was some evidence that tenants are paying the price of the fees ban, in terms of higher rents.
Asking rents outside London are at a new peak of £828 per calendar month – representing the biggest quarterly jump at this time of year since 2015.
Within London, rents are at a record of £2,104 on average per month – the biggest quarterly jump since Rightmove began recording the data.
These latest increases mean an annual rate of growth of 3.2% outside London, and of 5.6% within London.
Nationally, the number of available rental properties is 13% under its previous low in the third quarter of 2015, and 24% down in London.
Rightmove has asked landlords about their intentions.
Almost a quarter, 24%, said they are planning to sell at least one property, including 11% who say they plan to sell their entire portfolios.
Landlords told Rightmove that their reasons for selling up are the tax relief changes and the tenants fee ban.
The average landlord in the study lets three properties, with a quarter owning just one.
Of the 30% planning to increase their portfolios, most say that property still delivers better returns than other investments.
Rightmove housing expert Miles Shipside said: “There are a number of forces at play in the current rental market, all leading to record rents for tenants and fewer homes to choose from, yet demand remains strong.
“Worryingly for tenants there are signs that the stock shortage may worsen if some landlords follow through with their plans to sell up.
“The overall feeling among those landlords who are planning to exit the market is one of frustration with many telling us that the tax changes mean it’s no longer financially attractive to keep their properties.
“Early data seems to point to some of the income lost through the removal of tenant fees being passed on to the tenant in higher rents.
“Rising rents may tempt some landlords back in, but momentum is currently to downsize portfolios in spite of the prospect of increasing yields.”
One agent, Clynton Nel, at JOHNS&CO, told Rightmove: “We know of some investors who bought just prior to the referendum a few years ago who today are supplementing their investment with their cash each month as it is simply unprofitable right now.
“They don’t wish to exit because they may not yet have the gains they would want, but they see the opportunity in the longer term.”
Comments (10)
Rents are increasing due to the fee ban, the introduction of deposit caps and taxes, an extra £50 per month per pet bond and a wee rent increase may not cover the income tax rises. PRS is suffering with a shortage of rental property more homeless, stricter rules and higher rents for good tenants. So what have the government done, well they have hit an easy target just like driving offences, “easy cash” the biggest losers are tenants. S24 is a disgrace, taxing landlords on a business expense is the same as “no tax relief of business rents and rates”. Idiots..
Ignoring the boring and frankly depressingly predictable snarks about Corbyn and Shelter ( its the Conservatives that have destroyed the market thus far – and I’m not saying they have a monopoly on this).
What cannot turn a blind eye to is your headline –
‘shall I go or shall I stay’? for pity’s sake people –
SHOULD I STAY OR SHOULD I GO!
As you were.
“It’s the conservatives”. Just saying. 🙂
Dash94 – It’s a fair cop guv’.
Nope it isn’t just the Conservatives, its current opposition parties, particularly Labour MP’s, Shelter and Generation Rent. Not forgetting what Corbyn and McDonnell have said they will introduce, will kill off PRS.
Wonder if anyone from Shelter would care to comment?
Probably to busy handcuffing themselves to buses in London or sunning themselves in the Maldives on their £150,000 PA salary.
Do people not realise the impact of S21 is greater than S24 or fees ban? It is effectively giving tenants security of tenure and if you have a bad tenant you will be pretty much stuffed or cost you thousands of pounds to deal with using S8. As a landlord I can cope with the fees ban – the effect being it makes it much more difficult for slightly questionalbe tenant applications. S24 affected those who were highly geared more than some other. Loss of S21 is a loss of control!!!!!! and getting closer to the old Rent Act 1977. As for Corbyn and communist McDonnell with his “Theft for Citzens” bill (right to buy) & rent control will be the final reason NOT TO RENT RESIDENTIAL PROPERTY. Even the threat of these lunatics is causing some landlords to pack up and leave. Vote Labour and not be able to rent – what a plan! Your option is to buy your own property or live on the street well done labour – so progressive.
Until we see the full detail of the new regulations which not only abandon S21 but introduces other mandatory grounds and provides a method for an accelerated possession (i.e. a quasi housing court) it is way too soon to tell whether or not , knocking S21 on the head is good or bad. Far more concerning would be Magic Grandpa and his Communist cohorts winning the election – the old plea from the 1970’s will never become more true – ‘Will the last person to leave the UK, please turn the lights off’….
Wait till Corbyn and Mcdonell bring in RTB, protected tenancies etc. Then you will see a mass exodus. So many landlords are currently waiting to see what happens next with an election and feel battered by all the changes over the last couple of years.