MORE than a quarter of landlords plan to exit the buy-to-let sector altogether in the next three years, a survey of 2,096 landlords by Property118 has revealed, due to punitive taxation and the Renters’ Rights Act.
Responding to the survey, brokers and property experts said that “we are sleepwalking into the monopolisation of the British rental market”, where the sector will be run by “corporate landlords” with a “factory” and “soulless” approach to renting.
They also cautioned that, if landlords exit at this scale, tenants will feel the pain most in the form of higher rents.
The Property118 survey found that, over the past two years, just over half of landlords (53.8%) report their portfolio has stayed roughly the same size, while four in ten (40.2%) have been shrinking their portfolio through sales. Only 6% of landlords have been growing their portfolios.
Ominously, in the next three years, more than two-thirds of landlords (67.7%) expect to sell some properties or exit the sector entirely, against fewer than one in ten (9.5%) planning to buy.
The proportion intending to exit completely has climbed to 27.1%, while 40.6% plan to sell one or more properties. 22.8% expect their portfolio to be the same in three years’ time.
The news comes as brokers say a growing number of landlords are considering diversifying into semi-commercial property.
Mark Alexander, Founder at Norwich-based Property118.com, a community and news hub for landlords, said: “The worrying number isn’t simply that 27% of landlords are considering leaving altogether. It’s that for every landlord planning to buy, more than seven are planning to sell properties or exit.
“Not every intention will become a sale, of course, but that imbalance should concern policymakers. If rental supply continues to contract while demand remains strong, tenants will ultimately feel it through less choice, greater competition for homes and further upward pressure on rents.”
Thomas George, Director at Mansell McTaggart, an estate agency covering Sussex, was deeply concerned by the survey results and said they herald a seismic shift in the rental landscape.
He said: “The small landlord is leaving, the corporate giant is moving in and nobody’s talking about it. While 40% of landlords shrink their portfolios and 27% plan to exit entirely, a handful of well-capitalised companies are quietly hoovering up discounted stock at scale.
“This isn’t coincidence. This is strategy. We are sleepwalking into the monopolisation of the British rental market. Corporate landlords with a factory approach who are soulless, standardised and transactional.
“The personal landlord who knew your name and hadn’t raised your rent in three years? Gone. Replaced by a call centre and a rent review clause.
“Rental income, one of the last accessible wealth-building tools for ordinary people, is being consolidated upward into institutional hands. The Government set out to protect tenants. They may have handed their homes to the very people tenants should fear most.”
Babek Ismayil, CEO at homebuying platform OneDome, said tenants could feel the pain if landlords exit at this kind of scale.
He added: “Tenants in many areas of the country are already facing extremely steep rents. If more landlords decide to leave the sector and rental supply falls, that could put further pressure on rents.
“For renters hoping to move into homeownership, higher monthly housing costs can make it harder to save and take that next step.”
Nouran Moustafa, Practice Principal & IFA at Roxton Wealth, said the survey findings “reflect what many advisers are already seeing”.
She continued: “Landlords aren’t leaving because demand has disappeared, they’re leaving because the numbers increasingly don’t stack up.
“Higher borrowing costs, tax changes, tighter regulation and rising compliance costs have all squeezed profitability, particularly for smaller landlords. The risk is that demand for rental homes isn’t falling at the same pace as supply.
“If more landlords sell than enter the market, tenants are likely to face even higher rents and fewer properties to choose from. Ironically, measures designed to improve affordability could make renting more expensive if supply continues to shrink.
“The future of buy-to-let will increasingly belong to well-capitalised, professional landlords, while smaller investors may continue to exit unless the economic and regulatory environment becomes more balanced.”
