Tax Hikes Push Landlords out of the Buy to Let Investment Market

A growing number of landlords are considering exiting the buy to let investment market as the impact of tax hikes begins to kick in.

New housing predictions from property website Home have considered the impact of policy changes on house prices. A sharp rise in the number of homes for sale in recent months was noted by the site. It was predicted that this trend will continue, placing negative pressure on the housing market as the influx of properties grow.

Whilst the number of properties for sale are on the rise, the number of rental properties in the market are expected to begin to fall. This comes from the impact of the government’s anti-landlord tax hikes. According to Home, the number of new sales grew from 11 per cent across the UK between November 2017 and the same month last year. Meanwhile, the supply of rental properties dropped by 16 per cent. It is expected that these trends will persist into 2018.

London and the South East are expected to be hit the hardest from these issues due to the high cost of investment properties in the area. Property prices in Greater London dropped for the fifth consecutive month in December down 0.3 per cent in comparison to November. In the South East prices declined by 1.4 per cent between November and December. The annual change is now 2.3 per cent, which falls below the England and Wales average of 2.6 per cent.

On a positive note, 2018 looks bright for those selling properties in Yorkshire and the North West. These are the two areas that Home anticipates will become the leading regions for price growth, with hikes of 4.4 per cent and 4.7 per cent respectively. This is likely fueled by the fact that landlords in these areas see some of the highest UK yields.

Home director Doug Shephard said: ‘Any sort of buy to let exit will tip the market to the downside and the UK government should be monitoring the situation very carefully. Why? Because such a risk to the housing market would imperil the banks and the wider national economic interest, especially post-Brexit. If landlords are forced to sell up, all property prices will be driven down, leaving the first-time home owner in negative equity and mortgage liquidity hard to find for the first-time buyer. Surely not something the government would wish upon the housing market in 2018.’

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