Exodus of PRS landlords picks up pace

There are signs that a potentially larger-than-anticipated property sell-off among the nation’s landlords is underway, Bloomberg reports.

Using an analysis based on capital gains tax receipts compiled by real estate firm Savills, the figures will prompt concerns about the UK’s rental sector.

The data shows the number of rented homes being sold surged from 22,000 between February and March, to 25,000 between April and May.

Also, HMRC has recently revised upward the disposal figures for the 2021/22 tax year by 8.5% to 153,000 – which may indicate that landlords have been selling up earlier than previously thought.

The consultancy firm TwentyCi has also noted a big decline in rented home availability with numbers hitting a 14-year low in June – which also points to a landlord sell-off.

‘Greater number of buy to let landlords selling up’

Toby Parsloe, a research analyst at real estate firm Savills, told Bloomberg: “The rise in residential disposals in capital gains tax receipts does point to a greater number of buy to let landlords selling up.

“This trend started earlier than previously thought, picking up pace since the market opened again in June 2021 after Covid.”

He added: “For many landlords it simply isn’t worth it anymore, increasing the very real risk that more will be looking to exit the sector.”

While Savills’ forecasts suggest that landlord property sales are indeed rising, the reported disposals are still below the total seen in the two months following last September’s mini-Budget.

Landlords are also navigating a complex terrain

As tenants grapple with a cost-of-living crisis, landlords are also navigating a complex terrain which includes higher interest rates and rising costs.

And as rates rise, landlords with interest-only mortgages are vulnerable with many facing a tough decision – sell up or raise rents to pay the higher costs.

Savills says that since landlords pay CGT on any gains when they sell a property, this is an indicator for BTL sales because a property that isn’t a main residence has CGT due within 60 days.

However, BTL landlords who manage their properties through limited companies are exempt from capital gains tax – which means even more landlords could be selling than official data suggests.

The experts at Savills say the monthly CGT receipt data shows that in the 2022/23 financial year, there were 151,000 home disposals.

That’s the second highest on record, trailing closely behind the preceding tax year with 153,000 disposals.

But Hamptons last week had bad news for landlords selling up – it appears they have missed the top of the market and profits are £10,000 down on this time last year – and 6% of landlords sold at a loss.

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