The National Landlords Association (NLA) has predicted the UK housing market could soon be flooded with around half-a-million rental properties. Changes made to the stamp duty applied to the purchase of buy-to-let properties have not been the only ones to be made by Chancellor George Osborne. He is also going to bring to an end some of the tax breaks currently enjoyed by landlords. This means many landlords are seriously considering their position in the market.
More properties available for private buyers
The idea of these changes is to make more homes available for those who have yet to get on the housing ladder at all. Many are stuck renting when they really want to buy, and yet finding a suitable property can be very difficult.
According to the National Landlords Association, many landlords have much lower levels of confidence than they had before the changes were made. Indeed, confidence levels are said to be 5% below those seen after the financial crash in 2007. Additionally, the business outlook of landlords has also taken a nosedive in the last year. In 2015, confidence levels in this area sat at 67%. This year they have already dropped to 43%. This ranks not only as a significant drop, it’s also the lowest percentage level ever seen.
Landlords leaving the market
Thus some 500,000 homes are set to be sold as some landlords look to get out of the market altogether. Meanwhile, some with larger portfolios may sell off some of their properties rather than all of them.
However, the Chief Executive Officer of the NLA, Richard Lambert, predicts professional landlords will be the ones to take the biggest hit from the new regulations. He questions whether some people who are currently renting will have to find somewhere else to live – and they could be faced with fewer options to choose from.
NLA survey of members reveals worrying results
According to a survey the NLA has conducted among its membership, nearly a third of members (28%) did not plan to invest in any new properties. Furthermore, 5% were planning on exiting the market completely. Another 10% were aiming to sell some of their properties and keep others. Compared to the results seen from last year’s survey, the number of landlords who want to sell one or more properties in the next 12 months has doubled within the last year.
If the prospects presented by the NLA turn out to be true, the housing market could well be flooded with many more properties over the coming year. The real question is whether enough first-time buyers would be in a position to buy them as a result. This may depend on whether interest rates remain low, and whether housing prices would rise or fall in reaction to the additional housing stock entering the market.
Of course, the total number of properties would be the same. It is merely the type of person who buys them – landlord or private owner – that may change.