A significant proportion of landlords in the UK are contemplating divesting parts of their property portfolios, even as many report a healthy increase in rental yields. Research from Aldermore indicates that 42% of landlords are considering selling off some of their properties, driven by concerns over mounting regulation, evolving tax policies, and escalating property-related costs.
The lender's latest Buy to Let Index reveals a notable trend where nearly half of surveyed landlords, 47%, saw their yields improve over the last year, with the average increase standing at 7.2%. Furthermore, almost one in five landlords, 18%, experienced a yield growth of 10% or more. Despite these positive financial returns, a perceived disconnect exists within the private rental sector (PRS).
Jon Cooper, Aldermore’s Director of Mortgages, highlighted this disparity, noting that while tenant demand remains robust and yields are strong, a combination of increased regulation, tax alterations, and rising expenses is making many landlords reluctant to expand their investments. This sentiment is further underscored by the finding that 45% of landlords feel current market conditions are preventing them from growing their portfolios.
The research, however, did not identify evidence of a widespread sell-off. Among those considering sales, the primary reasons cited were tighter regulation, including the Renters' Rights Act (43%), and changes to tax rules (39%). Maintenance costs were also a significant concern for 37% of landlords, while 30% felt unfairly blamed for broader issues within the housing system. A substantial 55% of landlords indicated that higher tax rates on dividends, property, and savings could ultimately push them to leave the sector entirely.
The implications of landlords potentially exiting the market could be significant for the overall health and supply of accommodation within the private rental sector. Ensuring landlords feel confident enough to continue providing and investing in quality housing is deemed crucial for meeting ongoing tenant demand.