A new research from buy-to-let investor trade body the National Landlords Association (NLA) says that as landlords’ confidence is at its lowest level, they might sell 500,000 homes in the next 12 months.
After George Osbourne’s new measures, there has been great pessimism in this sector. The number of landlords looking to sell in the next 12 months has doubled since July 2015. That month, Osborne announced that the landlords’ mortgage interest tax relief was to be removed. This measure will be fully implemented by 2020-21 and it will mean that some landlords will pay tax on zero income or even on losses.
Also, last November, it was announced a change in the stamp duty that would add an extra charge of 3% in all second homes and buy-to-let properties, starting from next April.
All these policies intend to put more properties on the market in the UK. In addition, Osbourne has created new Help to Buy products with the aim of making it easier to purchase a home with a smaller deposit.
Nonetheless, these plans have been controversial, even in George Osbourne’s own party. Not only are they bad for small landlords, but also for companies holding more than 15 properties that look to avoid many of the penalties.
Other groups affected by the stamp duty changes are the parents who wish to help their children get onto the property ladder and those who own properties abroad.
The NLA research predicts that 100,000 properties will be sold a year after the first 500,000, dramatically shrinking the private rental sector.
Richard Lambert, chief executive officer of the NLA, claims that “the larger and more professional landlords will be hit worst by cuts to mortgage tax relief and increases to stamp duty, and who appear most likely to leave the sector.” Also, he said that landlords are highly likely to sell less desirable stock, rather than the one or two bedroom properties that will appeal to first time buyers.
And what will happen to the tenants of those properties if they can’t afford to buy a home and there are fewer and fewer rental properties available?
For Andrew Montlake, director at Coreco, it will be mostly amateur buy-to-let investors who will rush to sell their properties. Many professional and larger scale landlords will still continue to buy, but at a slower more considered pace. He considers that the property market needs some balance. Obviously, these measures will release a lot of stock for first time buyers, but they can cause a significant damage to the private rental sector.
Do you need advice to sell your property in Birmingham? Contact Love Your Postcode on 0800 862 0870.
Last Updated: 2016-02-12T10:17:51+00:00