Buy-to-let market isn’t shrinking, just changing say experts

Buy-to-let market isn’t shrinking, just changing say experts

Landlords across the country have been reassessing their options in the face of recent regulatory changes, but it’s more a case of adapting than leaving the market.

Change is afoot in the buy-to-let property market, but while some research shows that lending to new landlords has slipped in recent months, it seems that the majority of portfolio landlords have no intention of quitting the sector.

New research by Foundation Home Loans has revealed that three out of five landlords plan to persevere in the buy-to-let market for another six or more years, while portfolio landlords in particular are the most likely to be planning on continuing to operate in the long-term and expanding their property stock.

Government should support landlords

Only 13% of landlords surveyed planned to sell all their holdings over the next five years, and just 6% said they intended to exit within the next two years.

After the stamp duty surcharge introduced in 2016 made property investment more pricey for many, with an extra 3% tax liable on all additional home purchases not intended for owner-occupation, the latest changes to mortgage interest relief for landlords has served as another apparent deterrent from the government.

These were the most common reasons that landlords cited for leaving the sector, and the Residential Landlords Association (RLA) has been calling on the government to do more to help the small-scale landlords who are being forced out of the market as a result of these changes.

Those planning on expanding their portfolios said they were doing so to get ahead of future interest rate rises, with two in five portfolio landlords expecting to grow their property stock this year.

Adapting to change

Jeff Knight, marketing director for Foundation Home Loans, commented: “It is clear the market is changing but we are certainly not seeing a mass exodus of landlords from the market.

“Our research shows that while there are landlords who will be selling up, there are plenty more who are passionate about remaining a landlord for the foreseeable future and many of whom will be looking to expand their portfolios even further.

“The key challenge for the industry is not about a shrinking market, it is about how it adapts to a changing market, with different types of landlords with different sets of needs and help required.”

While some landlords will be looking into options such as trading through a limited company in order to offset the new mortgage interest rules, others or diversifying their portfolios in order to maximise their assets, including investing in up-and-coming areas of the north and Midlands.

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