Are landlords selling their properties and leaving the market en masse, as some experts claim? Or are these reports of an exodus exaggerated? Let’s cut through the hype and explore what’s really happening with landlords selling and those staying in the game.
You may have seen a wave of headlines recently suggesting that landlords are selling up and exiting the rental market in large numbers. But is this the full story? Data released last month indicates that some landlords are selling, but perhaps not in the dramatic way it’s being portrayed.
According to UK Finance, the number of outstanding buy-to-let (BTL) mortgages fell from 2.039 million in the first quarter of 2023 to 1.98 million a year later. In other words, the BTL mortgage market shrank by a small margin, reflecting some movement but not a mass exodus.
Similarly, figures from Zoopla in July showed that one in eight properties for sale had previously been a rental property. However, the property portal expects that 40% of these homes will be snapped up by another landlord and remain within the rental market.
So, while there is some movement with landlords selling, it’s far from the significant exit some are predicting.
The Other Side of the Coin
If a small number of landlords are selling up, it means many more are holding firm and staying in the buy-to-let sector. So, what’s driving their decision to remain?
A survey by Paragon Bank asked small-scale landlords (those with between one and three properties) about their reasons for staying in the BTL sector. Here are their top five answers:
- Strong Tenant Demand: 60% of respondents said robust tenant demand gave them confidence to stay put. Ironically, as some landlords sell, this demand is likely to increase, further encouraging those who remain.
- Retirement Income: 54% cited the potential for a healthy income in retirement as a key motivator. Property can provide a steady income stream that appeals to those looking towards their financial future.
- Property Price Growth: 47% highlighted that house prices have risen significantly over the years. UK property values have grown by 73% in the past decade alone, making property a consistently profitable long-term investment.
- Ambition to Build a Portfolio: 40% of landlords are keen to expand their property holdings, seeing it as a proactive way to build wealth and financial stability.
- Preference for Property Over Other Investments: 34% prefer tangible assets like property over more volatile investments such as stocks and shares. For many, property remains the best way to save and grow money over the long term.
What Does the Future Hold for You?
If you’re evaluating your position and weighing your options in the rental market, it’s crucial to make informed decisions. Whether you’re considering selling up or expanding your portfolio, understanding the landscape can help you make the right move.
We’re here to help. Our team can review your current procedures, tax regime, and investment goals to advise you on the best path forward in a shifting market.
Contact us today to discuss your property portfolio and get expert guidance on staying profitable, whether you’re holding firm or considering a sale.
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