There has been a recent increase of landlords pulling out from the private rented sector, thought to be due recent tax and legislation changes. This has lead to a drop in rental properties available across the UK, according to an analysis by Home.co.uk.
Tax changes, such as the 3% Stamp Duty surcharge and the phasing out of mortgage interest relief, have been a concern for many. With the Tenant Fees Bill also progressing, it appears to have shook the confidence of many buy-to-let investors.
Home.co.uk’s research shows that there has been a 12% drop in rental property listings over a 12-month period. London specifically is seeing the worst change, with a 20% drop in properties available to rent over the last 12 months. The borough of Westminster is showing the most prominent drop within the capital city, as the analysis shows its listings to have fallen by 447 properties over a 12-month period, with average monthly rents also rising by 24% to £5,292.
A drop in lettings listings is thought to be a result of recent tax and legislation changes
Home.co.uk director Doug Shephard said: “The current situation is particularly dire for tenants, who are set to continue to face increasing competition for good quality properties and rising rents.
“Government red tape and higher taxation in the lettings market has triggered forced sales by landlords. Moreover, this additional supply is now negatively impacting on capital values. Vendor landlords have done their maths and they know that if they continue to let the property, even with a rent hike, they will be losing money overall. Conclusion: time to sell.
“The problem is, though, that the private rented sector constitutes 20% of the housing stock, the majority of which is owned by landlords with small portfolios. A recipe for disaster? Maybe. Negative sentiment in this sector is certainly sufficient to turn confidence in the wider property market to the downside, thereby creating misery for all, especially those wishing to rent.”