Buy-to-let landlords – Do they have a future?
Buy-to-let landlords are facing a perfect storm – rising interest rates, increasing legislation and the prospect that tenants cannot afford to pay rent rises that match the increase in these costs, and many may now decide to quit.
Head of Property & Construction Heather Powell said: “The shortage of housing in the UK, and in particular in London and the South East, is resulting in numerous renting applications for every property that comes on the market (29 per property per the last report). But many landlords have accepted tenants only to find that within a short period of time they are unable to pay.
“If tenants cannot afford the rent will landlords be interested? A flat occupied by tenants unable to pay rent only results in one thing for a landlord – an increase in costs and several months with no income to pay the mortgage and other bills, and considerable stress.
“Changes over the last ten years have gradually made the market less attractive for investors holding one or two properties. These include a reduction in tax relief for interest paid, imposition of responsibilities on landlords such as checking the tenants can live in the UK and a requirement to improve the energy efficiency of homes that are let that comes in in 2025.
“All of these changes mean that property letting is being transformed into a business where an in-depth knowledge of the rules, a corporate structure, and a portfolio large enough to bring economies of scale is the only way to make a profit.
“Landlords with less than five properties, and especially those with high debt, are going to find the next year challenging and need to consider their position. If they decide that there is no more ‘profit’ to be made they should plan their exit carefully to ensure that they maximise the selling price. Now may be a good time to start planning and consider any works required to attract the best sales price in 2023.”
Would you like to know more?
If you would like to discuss how this may affect you, please get in touch with your usual Blick Rothenberg contact or Heather Powell using the details on this page or the form below.
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