The Royal Institution of Chartered Surveyors is warning of a likely rise in the number of landlords leaving the lettings market. 61% of the institution’s members believed there would be significant rise in the number of landlords quitting the market over the next 12 months. It is thought that recent policy changes will drive this exodus of so-called ‘dinner party landlords’.
Speaking to The Times, Paul Bagust, property standards director for RICS, said: ‘The number of landlords exiting the market due to recent policy changes is concerning, especially given house price rises. A functioning private rented sector is crucial to a healthy housing market.’
Recent policy changes include an extra 3 per cent stamp duty surcharge on buy-to-let properties which was introduced last year. The government has also introduced a four-year scale-back of the tax relief that landlords can claim on mortgage interest payments. By 2020, landlords will no longer be able to deduct mortgage interest costs when calculating their taxable profits. These changes could affect many people: it is estimated by HMRC that 20% of UK households live in the private rented sector, up from 12% in 2005-6.
Landlords will also be affected by tougher lending regulations being implemented by the Prudential Regulation Authority later this year. The statistics for this year point to a definite downward trend in buy-to-let lending. In the first three months of 2017 only 18,100 mortgages were issued for buy-to-let house purchase, down 63% on the previous year.
RICS believe that there over the next few years there will continue to be a discrepancy between supply and demand. They expect rental growth to outpace house prices over the next five years, rising by an average of 3 per cent per year.
Buying a new home in Edinburgh or elsewhere in Scotland is a huge decision in your life. Our property experts will provide you with peace of mind so you can look forward to the excitement of getting the keys and opening your front door for the very first time. Read what our clients say about us.