Landlords are not necessarily leaving the buy-to-let market en masse but rising rents and stretched affordability is changing the dynamic of the market, according to mortgage adviser Jane King.
Speaking at the FTAdviser Financial Advice Forum 2023 today, King and her fellow panellists discussed what the future of buy-to-let could look like as landlords begin to leave the market.
Jane King, mortgage and equity release adviser at Ash-Ridge Private Finance, said that while there has not been a large number of landlords leaving the market, people who had become accidental landlords have reconsidered their position.
Instead portfolio landlords are sticking with the market as they see the long-term benefits.
“Accidental landlords are the ones looking at their finances and are concluding that their money is better off in a tax efficient investment rather than putting it into property”, King said.
She quipped: “Who would be a landlord right now?”
“In recent years there has been new government legislation, we have been hit with taxation and now we have the dreaded rise of interest rates. A lot of landlords are coming to advisers for their annual reviews, or their fixed rates are coming to an end and they are seeing their repayments doubling, tripling or even more.”
Also appearing on the panel, Heather Powell, partner and head of property and construction at Blick Rothenberg explained how regulation could be to blame for pushing these landlords out of the market.
She said the regulations coming through on energy performance certificates and health and safety reform was having a larger effect on accidental landlords, or those who had one or two properties, as it was “stripping away their profits”.
Earlier this month prime minister Rishi Sunak scrapped plans for new private rental properties to have an EPC rating of at least C by 2025.
But Powell questioned why accidental landlords would choose to stay in the market rather than setting up an investment portfolio and not having to deal “with the 10 o’clock phone call on a Saturday night about a problem with the rental property.”
“So take the passive investments and leave someone else to deal with it.”
She said this could be the government’s policy where they want to see more professional landlords and push the individuals out of the marketplace.
amy.austin@ft.com
