Demand in Buy-to-Let Sector “has Never been so Low”

Demand from landlords in the buy-to-let sector “has never been so low”, according to a leading letting agent.

Demand in Buy-to-Let Sector “has Never been so Low”

The number of people investing in the buy-to-let sector is falling at an alarming rate, recent reports have shown, while many existing landlords are selling their portfolios ahead of changes to tax relief on finance costs.

Buy-to-let lending improved during the fourth quarter (Q4) of 2016, with the share of lending for acquisitions in the buy-to-let sector increasing from 28% in Q3 to 38% in Q4, which is comparable to the 38% recorded in Q2 last year, shows the Mortgages for Business complex buy-to-let index.

But with tax relief on landlords’ finance costs set to be phased out from next month, and now that the Bank of England’s Financial Policy Committee has been granted greater powers over the buy-to-let sector – making it more difficult for many property investors to get a mortgage due to new, stricter affordability tests – activity in the sector is slowing dramatically, warns the Director of Milton Stone, Sacha Moussaieff.

The central London letting agent comments: “In my 20 years of agency, the demand for buy-to-let property has never been so low and landlords have been driven out of the market.”

He also believes that “the extra 3% Stamp Duty”, on top of additional taxes, “means that becoming a landlord is extremely unappealing”.

Worryingly for tenants, Moussaieff also says that he fully expects to see rent prices rise to combat the “new tax laws on rental income”.

He is not the only industry professional to caution about rent rises; a leading economist fears that rents could rise by up to 30% for tenants as landlords come to terms with the impact of the forthcoming tax changes on their buy-to-let businesses: https://www.justlandlords.co.uk/news/government-attack-buy-let-push-rents/

Are you planning to put your rents up to mitigate financial changes?