Are landlords planning to exit buy-to-let en masse? We asked them

At the National Landlord Investment show in London attendees were aware of the challenges facing the sector – but they were not, on the most part, planning to get out.

This is Money visited the trade show to take the temperature of the buy-to-let market, following talk that swathes of landlords are considering selling up.  

Fran Ivens found that, despite rising mortgage rates, the loss of landlord tax benefits and the prospect of an increased regulatory burden, the sector is still standing.

Although the buy-to-let sector is growing, landlords are facing an increasingly difficult market

At the event at Old Billingsgate market in London, many of the landlords we spoke to were cautiously confident. 

Several attendees were even there the intention of acquiring their first buy-to-let property, rebuking the theory that becoming a landlord is no longer seen as a worthwhile investment.

Kelly-Marie Alleyne is the managing director of her own property inventory company, and now plans to become a landlord herself. 

 ‘It is absolutely a sustainable market,’ she told This is Money. ‘There has been a lot of negative press surrounding taxation and EPC laws but the demand for housing is there.’

Under new regulations, landlords need to get their properties up to an energy performance certificate rating of C by 2025 for new tenancies, and 2028 for existing ones.  

Viv Bridge has been a residential landlord for eight years and takes a long view on the market

Alleyne isn’t alone in her positive outlook. In the latest private landlord survey, commissioned by the Department for Levelling up, Housing and Communities, nearly 70 per cent of landlords said that if a property of theirs became vacant they would re-let it, rather than selling or leaving it empty. 

And data shows the sector has grown in England. The number of households occupied by private renters in England has increased from two million in 2000 to 4.61 million in 2022, according to Statista. 

‘I know everything in the news is saying it is absolute chaos but as long as you are managing it right, it’s not,’ adds Ash, a landlord who owns multiple Midlands-based properties – both residential and commercial.

‘As long as you get a little bit of a heads up [on the regulatory changes] and you can change things in accordance and it’s fine.’

Others share a similar view. They look at property as a long-term investment and while currently conditions are tough, it is still a worthwhile enterprise.

Viv Bridge has been a landlord for eight years with multiple residential properties. They are all within five miles of his house, so he can be on hand if something goes wrong.

‘I’m looking at expanding,’ says Bridge. ‘It is a long game, and I am not as young as I used to be but I am prepared to take a 15 to 20 year view on it.

‘The demand will be there for a lot longer and I think the starting point for London is around a £43,000 deposit [the average first time buyer deposit in the capital is around £125,000] which makes it more likely that more people will be renting longer into the future – which in and of itself may not be a good thing, but there you go.’

Higher landlord taxes prove a sticking point 

The main cause of complaints from landlords was the changes the way their tax works. 

Landlords are now taxed on the income from their rental properties, not the profit. Previously they had been able to deduct mortgage payments from their income, meaning it was tax free and significantly reduced their bill.

There are still a number of deductible expenses you can take from rental income before tax, including letting agent and management fees, insurance costs, and general maintenance, but the difference in costs for many is significant. 

Elliott Altman, a landlord and property manager, admits this is the toughest it has been for buy-to-let. After almost thirty years in the industry, he says the combination of increased regulatory burdens reduced tax incentives and tenant frustration with increased prices and lack of availability.

‘It’s just a very bad time,’ he says, adding that many of the landlord clients of his property management business are looking to sell. However, he is doing the opposite and looking for opportunities to grow his buy-to-let portfolio.

Although some landlords are planning to downsize their portfolio most would rather see regulation around the sector changed

‘No fault’ evictions a cause for concern 

Not everyone shares his optimism. Enoch Rodriquez has been a landlord for over 18 years and currently owns four rental flats in Hertfordshire, as well as a collection of garages. 

He first became a landlord as a way of building up a deposit and getting on to the housing ladder himself, but is now looking to pull back from the sector. 

There is too much legislation for small scale landlords to keep up with, he says, in addition to the tax changes.

He is also worried about his ability to exit the sector if the proposed changes to section 21 are introduced.

If the Renters Reform Bill goes ahead, the right of landlords to initiate no fault evictions would be removed, leaving landlords like Rodriquez wondering how easily they would get their property back from renters.

The government has since unvieled plans to make it easier and faster for landlords to evict anti-social tenants. 

‘If I wanted to sell one of my properties in order to release funds to provide a deposit for my daughter to buy a home that is going to be much harder,’ he says.

‘If I had the money in stocks and shares it would be easy.’

Likewise, Simon who has been a landlord for 40 years says he is looking to withdraw from the sector. 

He currently owns six properties and is speeding up his exit plan to sell at least some of them due to what he sees as the increased burden on landlords.

‘You are handing 40 per cent [of your income] over to the Government,’ he says. ‘I will just have to sell when a property becomes vacant.’