Call for government action as landlords choose to sell up

The UK’s rental market is facing a crisis as many landlords are choosing to sell their properties due to new legislation, economic uncertainty and tax changes, a legal expert warns.

Gina Peters, the head of landlord and tenant at law firm Dutton Gregory, says this could lead to a shortage of privately rented homes and affect millions of tenants.

She says the government needs to act to prevent more landlords from selling up.

And she points to estate agent Savills who say that 25,000 homes that were sold between April and May of this year were by landlords.

This was an increase from the previous two months when 22,000 homes were sold by landlords.

‘Alarming reduction in the number of privately rented homes’

Ms Peters said: “The recent increase in buy to let landlords selling their properties could see an alarming reduction in the number of privately rented homes, with private landlords expecting to bank more than if they were to keep their portfolios.

“However, with more of the population being unable to afford to buy their own home, the UK’s dependency on the rental market is more so than ever.”

She adds that being a landlord in 2023 is not as profitable or easy as it used to be.

She said: “Up to the year 2000, property owners were eligible for mortgage interest relief at source, which provided valuable tax relief for higher-rate taxpayers.

“More recently, changes have also been made to capital gains tax thresholds, and in April 2023 the capital gains tax-free allowance was reduced from £12,300 to £6,000.

“In April 2024, this will be decreased to £3,000, meaning landlords will have to pay out more in capital gains tax when selling a property.”

Selling of properties by landlords was 8.5% higher than expected

Ms Peters says that official figures from HM Revenue and Customs showed that between 2021-2022, the selling of properties by landlords was 8.5% higher than expected, with 153,000 properties sold.

She also said that 95% of letting agents had experienced their landlords selling at least one of their properties.

Another factor that was driving landlords away from the rental market, she says, is the Renters (Reform) Bill which is working its way through Parliament.

Ms Peters said: “The Renters (Reform) Bill is expected to create a big change to the way landlords can regain possession of their properties.

“This comes at a time when the backlog in repossession cases to be heard at court is already at record levels.”

She urged the Government to find a solution that would make it financially viable for landlords to retain their buy to let portfolios, as it was critical to a healthy property market.

Ms Peters said: “Many of our clients are asking what’s next?

“The Government needs to step up and find a solution so that it remains financially viable for landlords to retain their buy to let portfolio, as it’s critical to a healthy property market.”

Ms Peters has specialised in residential landlord and tenant law for 22 years and has also written a book called ‘Lettings Law for Property Professionals: Your Legal Questions Answered’, which provides a reference for many legal topics related to renting.

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