0:01 AM, 5th September 2024, About 3 months ago 1
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A record number of rental homes are hitting the market as landlords worry about possible tax hikes from Chancellor Rachel Reeves.
According to property website Rightmove, the number of rental homes entering the sales market has doubled in the last decade.
Rightmove reports that 18% of properties currently for sale were previously on the rental market, up from 8% in 2010.
Rumours of a possible capital gains tax increase have fuelled uncertainty in the private rented sector as many landlords choose to sell up.
The hotspot is London, where nearly a third (29%) of homes for sale were previously for rent, followed by Scotland (19%) and the North East (19%).
However, Rightmove says the trend has been slowly increasing for many months. The previous five-year average for homes switching from the rental market to the sales market is 14%, suggesting that despite the recent spike, the rise is part of a broader trend rather than a sudden mass exodus of landlords.
The number of new properties coming to market is a smaller +3% up on this time in 2019.
Rightmove suggests that there needs to be incentives for landlords to stay and continue to invest in the private rented sector to provide a healthy market for tenants.
Tim Bannister, Rightmove’s property expert, said: “In recent years it has become more attractive for some landlords to leave the rental sector rather than to continue to invest in it, due to rising costs, taxes, and legislation.
“A healthy private rented sector needs landlord investment to provide tenants with a good choice of homes. We’ve seen over the last few years how the supply and demand imbalance can contribute to rising rents, so there is a worry that without encouragement for landlords to stay in rather than leave the rental sector, it is tenants who will pay the price.”
Mr Bannister adds: “However, despite the trend of more landlords choosing to sell up, it doesn’t appear to be a mass exodus, and we will need to monitor the longer-term impacts of what happens to the rental supply that is put up for sale.
“For example, these homes could provide first-time buyers with more choice. They might also be purchased by other landlords and put back into the rental market, which would signal a changing of the guard rather than a complete exit from landlords. In any case, we hope the government is considering ways it can support landlords and the private rented sector ahead of the Autumn statement.”
Angharad Trueman, ARLA Propertymark President, says legislation targeting landlords could lead to more good landlords leaving the sector.
She said: “The private rented sector plays a crucial role in providing safe and secure housing across the UK.
“However, current government policy continues to risk squeezing good landlords out of the sector with ever-increasing demands from new and amended legislation, taxes and other financial hurdles, ultimately making finding and affording a home increasingly difficult.
“With the social rented sector at full capacity and the prospect of buying a home out of reach for many, the private rented sector needs to be better sustained and nurtured. The UK government must support investment to make this an attractive option for prospective and current landlords to kickstart the nation’s housing crisis recovery and provide people with much-needed homes.”
Chris Norris, policy director for the NRLA, said: “Today’s data will be a serious concern for all those renters struggling to find somewhere to call home. With demand already massively outstripping supply, Rightmove suggests the situation is set to get worse.
“Every rental home that is sold simply exacerbates the imbalance between supply and demand. Whilst some of these properties will inevitably end up on the owner-occupied market, that will be of little comfort to those households struggling to access quality housing.
“What we need is a housing strategy that recognises the need for more of every type of property, including high quality homes for private rent. That’s why the Budget needs to announce pro-growth tax plans to meet the needs of renters across the country.”
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PAUL BARTLETT
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Sign Up22:37 PM, 5th September 2024, About 3 months ago
You just can't have it both ways; more regulation, more tax, more risk, less control, and cheaper rent.
All these government initiatives add cost to the point that losses result and landlords exit. Thus supply reduces and cost increases, again.
HMRC thinks we are not in business despite the copious evidence to the contrary. Thus they will get less tax and more housing support costs as we leave.
Most take the long view to sell at the planned end of tenancy, but some will take the CGT increase threat as a reason to Section 21 and leave ASAP.