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Almost 4,000 buy to let properties per month are being sold by property investors as part of the first recorded fall in the number of rental properties in 18 years.
New official figures from the Ministry of Housing report found that around 3,800 buy to let homes are being sold by landlords each month. This is due to changes in mortgage interest tax relief, which continue to have a negative effect on the buy to let market.
Landlords’ profits have been negatively affected by a plethora of tax and regulatory changes over the last few years. These changes range from the removal of the ‘wear and tear’ allowance for rental properties and the implementation of the 3 per cent Stamp Duty surcharge.
Chief executive of letting agent trade body ARLA Propertymark, David Cox, said: ‘The barrage of legislative changes landlords have faced over the past few years has meant the buy to let market is becoming increasingly unattractive to investors. Landlords are either hiking rents for tenants or choosing to exit the market altogether to avoid facing the increased costs incurred.’
The vast numbers of landlords leaving the buy to let market has lead to a chronic shortage of properties available to rent in certain parts of the country. The disparity is felt particularly acutely in London where rental demand is high.
CEO of Shojin Property Partners, Jatin Ondhia, commented: ‘As a result of the government’s increase in stamp duty, it is now much more costly to acquire a buy to let property. A £250,000 investment property will incur stamp duty of £10,000 compared to £2,500 for an owner occupier. Many landlords have seen their profits eroded by the increased burden of taxation and regulation. They are also facing poor buy to let yields especially in London for example, where they are between just 2-3 per cent, while nationwide the average yields are between 6-8 per cent.’