The private rented sector could be set to contract in size as property sales by existing landlords are predicted to outstrip purchases by the end of the year (2017).
The warning, from the National Landlords Association (NLA), emerges as the latest English Housing Survey shows that the private rented sector (PRS) plays an increasingly significant role, accounting for 20 per cent of the country’s housing mix.
Analysis of members’ property transactions by the NLA shows that net growth (property purchases minus sales) has fallen by 63 per cent since George Osborne announced the withdrawal of mortgage interest relief in July 2015.
Further research from the NLA* also shows:
- The proportion of existing landlords looking to buy properties in the coming year has fallen to its lowest ever point – 16 per cent.
- The proportion of existing landlords who intend to sell property in the next year has more than doubled since July 2015 – rising from seven per cent to 16 per cent.
This represents the lowest stated intentions for landlords to invest since the NLA’s Quarterly Landlord Panel, conducted in conjunction with BDRC Continental, began 10 years ago, and the NLA is now predicting a net reduction of property transactions by 2018.
Richard Lambert, Chief Executive Officer at the NLA, said:
“There has been a clear correlation over the past year between our findings on what landlords have told us they intend to do in terms of buying and selling in the coming year and their actual transaction activity. . If the trends keep moving in the same direction, then by 2018 we’ll have more experienced landlords selling than buying, contributing to a net reduction of private rented properties.
“Some new landlords will enter the market to take up the slack, but the progressive removal of mortgage interest from April this year, as well as a three per cent stamp duty surcharge on additional property purchases, means it will become increasingly difficult for anyone considering their first steps in the market.
“The headlines will read that a mass exodus of landlords will be a good thing, but the reality is more people now rely on private rented housing than ever before, and absolutely no good can come from fewer homes being available for those who need them most.”
*NLA Quarterly Landlord Panel - Q4 2016 (657 respondents)