Professional Landlords Snap up Properties at Below Market Value

This comes as arrears on buy-to-let properties jumped 28% - leading to an exodus of amateur landlords from the market. 

• Just 1-in-5 landlords say their investment has been profitable in 2023.
• A further 1-in-5 say they became landlords without sufficient knowledge and lost thousands as a result. 

New findings have revealed an increase in professional landlords snapping up UK properties as the market continues to experience its worst decline in 14 years. This comes amidst an exodus of amateur landlords who are grappling with high mortgage interest rates, which, in turn, is forcing them to sell in large numbers. In light of this news, David Hannah, Group Chairman of Cornerstone Tax – the UK's leading property tax experts – discusses what to expect from the UK's rental market in the remainder of 2023.
 
Recent findings from the UK's leading property tax experts, Cornerstone Tax, have revealed that only 1-in-5 landlords say their investments have been profitable in 2023. This comes as recent findings from UK Finance reported that in the second quarter of this year, there were almost 9,000 buy-to-let mortgages in arrears of at least 2.5% of the outstanding balance, a 28% increase from the previous quarter. Due to the increase in costs, the National Association of Property Buyers has forecasted that around 100,000 landlords will quit the market every year between now and 2028.
 
The exodus of landlords has resulted in an increase in the number of buy-to-let properties entering the market. Savills has reported that 25,000 homes in the UK were sold by landlords between April and May, compared to 22,000 in the previous two months. This comes at a time when the average UK property is now worth £279,569 - £14,000 less than a year ago. Further research from Cornerstone Tax reported that only 1-in-5 landlords say they became landlords without sufficient knowledge and lost thousands as a result. The recent move from professional landlords to snap up these buy-to-let properties at low prices, as Hannah points out, is because they have spotted the opportunity to expand their portfolios and set themselves up for more long-term returns from the property market.
 
David Hannah, Group Chairman at Cornerstone Tax, discusses the current landscape of the rental market: 
 
"It comes as no surprise that landlords are struggling with increasing costs and subsequently falling into arrears as a result. Our data has found that 1 in 5 say they became landlords without sufficient knowledge and lost thousands as a result.

"However, the fact that professional landlords are now buying up former buy-to-let properties and putting them back on the rental market will mean that there is a resurgence in the wider availability of rental properties in a time when demand is outstripping supply. However, professional landlords buying additional stock has the chance to drive rental prices higher in the UK. Something which will be a concern to renters as figures earlier this week showed that rent prices are set to rise by 25% by the end of 2026.
 
"I think new measures should be considered and introduced into the rental market for aspiring landlords as it is becoming an increasingly unattractive environment for them. By making the buy-to-let market a more attractive investment, it will aid with the chronic undersupply of rental properties and has the ability to balance rental prices."

Source: Cornerstone Tax & Insight DIY Team

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