Rising Costs And Potential Tax Hikes Prompt Landlords To Sell Up

• Cornerstone Tax reveals that 15% of landlords are selling up due to rising costs associated with their property
• 20% of landlords became one without the sufficient knowledge needed and have lost thousands as a result
• 24% of landlords say that their biggest mental health strain is managing their tenants
• 19% of tenants have had to change rental properties five times in less than five years through no fault of their own
• 17% of tenants say that they have lost out on a property that they wanted to rent in the last two years due to a bidding war

David Hannah, Group Chairman of Cornerstone Tax, discusses the increased financial pressures on British landlords:

Sales of buy-to-let properties and second homes have surged by 34% over the past six years, reflecting increased financial pressures on landlords. According to Savills, this rise is partly due to factors such as higher stamp duty, the loss of mortgage interest tax relief and multiple dwellings relief. With the Labour government potentially aligning capital gains tax (CGT) rates with income tax rates, landlords are concerned that this will lead to higher tax bills, resulting in increased sales to avoid future tax increases. With The Royal Institution of Chartered Surveyors also noting a decrease in new rental market listings, indicating a decline in properties available for rent, Cornerstone Tax – the UK’s leading property tax consultancy - has revealed that 15% of landlords are considering selling up due to rising costs associated with their property.

The Bank of England’s long battle with inflation beginning in December 2021 has pushed interest rates up from near zero to 5%, as of last month. This has had a particular impact on landlords that took our mortgages on buy-to-let schemes during the era of low interest rates in the 2010s under the assumption that their property would be a safe investment. According to Cornerstone’s data, a staggering 20% of landlords became one without the sufficient knowledge needed and have lost thousands as a result, with average estimates as high as £7500.

David Hannah, Group Chairman of Cornerstone Tax, highlights how the record number of landlords leaving the rental market is contributing to serious problems of supply and demand within the UK’s major cities. Cornerstone’s research states that 19% of tenants have had to change rental properties five times in less than five years through no fault of their own as landlords are forced to either exit the market or pass on these record high mortgage costs onto their tenants. Moreover, as demand continues to outstrip supply within the market, 17% of tenants have also admitted that they have lost out on a property that they wanted to rent in the last two years due to a bidding war. 

David Hannah, Group Chairman of Cornerstone Tax, comments: 

"Our data highlights a clear issue in the UK's rental market, many of these landlords took out mortgages on buy-to-let schemes during a period of sustained low interest rates; fast forward to 2024 and the pressure currently facing landlords is simply too much. High interest rates and the highest tax burden since the second world war have forced thousands of landlords to sell up, which then puts further pressure on renters due to a lack of stock.
 
"We are generally seeing an exodus of landlords from the capital and South East, looking towards the North East of England instead. It's a region that's seen the highest growth in property prices in the last twelve months, with many seeing it as a much safer investment than the capital."

Source : David Hannah, Group Chairman of Cornerstone Tax

Image : VictorHuang / iStockphoto / 672126760

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