Record number of former rental homes listed for sale
We’ve seen a growing trend of some landlords choosing to leave the rental sector due to rising costs, taxes, and changes to legislation.
Right now, almost 1 in 5 (18%) homes currently for sale were previously rented out, compared with just 8% back in 2010. But this is a national average, and some areas are seeing a higher percentage. London is the current hotspot, with almost a third of homes (29%) currently for sale previously rented out.
Our property expert, Tim Bannister, says: “Despite the trend of more landlords choosing to sell up, the average number of rental homes being put on the market for sale over the last five years is 14%, so it doesn’t appear to be a mass exodus. We will need to monitor the longer-term impacts of what happens to the rental supply that is put up for sale. For example, these homes could provide first-time buyers with more choice.
“They might also be purchased by other landlords and put back into the rental market, which would signal a changing of the guard rather than a complete exit from landlords. In any case, we hope the government is considering ways it can support landlords and the private rented sector ahead of the Autumn Statement.”
When is the Autumn Statement?
The new Labour government’s Autumn Statement will be released on 30 October, when Chancellor Rachel Reeves will lay out the party’s fiscal plan for the coming years.
Which policies make it into the plan remains to be seen, however it has been widely rumoured that an increase to Capital Gains Tax could be one of the measures announced next month. This could mean that landlords will now need to pay additional tax on any income they make from rental homes. And it seems that these rumours – compounded by additional costs for landlords, that have grown over the years – are leading to some making the decision to sell their rental properties.
What does this mean for the rental market?
The past few years have been incredibly busy for the rental market. Rents have been pushed to record highs due to a high volume of enquiries for every property, and not enough homes to meet the demand. And while the rental market has been calmer in recent months – with price growth slowing and fewer tenants enquiring per property – the overriding need is for more, not fewer, homes for tenants to choose from.
Tim says: “A healthy private rented sector needs landlord investment to provide tenants with a good choice of homes. We’ve seen over the last few years how the supply and demand imbalance can contribute to rising rents, so there is a worry that without encouragement for landlords to stay in rather than leave the rental sector, it is tenants who will pay the price.”
It remains to be seen if these former rental homes that are now for sale will be purchased by first-time buyers who’re able to take advantage of having more homes to choose from, or bought by landlords who end up putting them back on the market to rent.
Either way, more incentives would encourage more landlords to keep their properties, rather than sell up, to be able to create more choice and sustainable rents for tenants.
The header image for this article was provided courtesy of Chestertons, Fulham Parsons Green Lettings
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