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Landlords are reducing their stock in response to the hostile policies enacted by the past few Conservative governments.<\/p>\nLandlords are reducing their stock in response to the hostile policies enacted by the past few Conservative governments.<\/p>\n
This is according to the latest research by London lettings and estate agent, Benham and Reeves, which compared the size of investors\u2019 portfolios between the first quarter of 2022 and the same quarter this year.<\/p>\n
Throughout England and Wales portfolio sizes have fallen by -5.6% year-on-year, dropping from 9.1 to 8.6 – though the situation is far worse in some regions.<\/p>\n
Investors in Wales worst affected<\/strong><\/p>\n In Wales, professional landlords seem to be leaving in droves, as portfolio sizes have fallen by a huge -42.9%, from an average of 12.6 in 2022 to 7.2 in 2023.<\/p>\n In England the worst affected region is the East Midlands, where landlords have typically reduced their portfolios by -33.9%, from 11.8 to 7.8. <\/p>\n Similarly there were major reductions in the North West (-17.0%), where average portfolio sizes dropped from 10.6 to 8.8.<\/p>\n It\u2019s likely regions with lower house prices are welcoming new investors with small portfolios, which is also pulling down the average portfolio size.<\/p>\n Why landlords are selling<\/strong><\/p>\n Conditions for investors have slowly worsened over the years.<\/p>\n They first started to degrade when the government introduced the 3% stamp duty surcharge in 2016.<\/p>\n But a more impactful change was arguably the phasing out of mortgage income tax relief. This meant landlords were taxed on their income rather than their profits, which is now an even bigger problem since mortgage rates have risen so sharply. The tax relief was replaced by a meager 20% tax credit.<\/p>\n In Wales – the region where landlord portfolios have fallen the most – landlords are having to cope with Rented Homes Wales Legislation, introduced in June, which gives tenants a six months no-fault eviction notice period.<\/p>\n And the climate for investment looks to be worsening in the years ahead, as from April next year landlords who sell properties will only be given a personal Capital Gains Tax allowance of \u00a33,000, down from \u00a36,000.<\/p>\n Section 21 evictions are set to be eliminated, which could mean landlords will have a harder time moving on bad tenants.<\/p>\n Investors with inefficient properties will also be tasked with bringing their homes up to an Energy Performance Certificate (EPC) level of C by 2028 to be allowed to rent them out, a process that could be very costly for those who hold historic housing stock.<\/p>\n East of England the outlier<\/strong><\/p>\n This trend of reduced portfolios isn\u2019t the case in every region, as in the East of England typical portfolio sizes have actually increased by 43.8% year-on-year, from 6.4 in Q1 2022 to 9.2 in Q1 2023.<\/p>\n There are also smaller increases in Yorkshire and the Humber (11.1%), South East (10.1%), and West Midlands (8.2%).<\/p>\n The remaining six regions have all seen portfolio sizes fall, with the North East (-1.0%), London (-1.3) and the South East (-3.8%) seeing only minor reductions.<\/p>\n Director of Benham and Reeves, Marc von Grundherr, commented:<\/strong><\/p>\n \u201cIt\u2019s getting harder to be profitable as a landlord, and that impact is starting to show.<\/p>\n \u201cLosing income tax relief had a big effect, while many investors are understandably worried about the upcoming changes to Capital Gains Tax, minimum EPC rules, and the elimination of Section 21 evictions.<\/p>\n \u201cDeclining portfolio sizes should act as a warning to the government. The tax landscape is unfairly balanced against landlords and unless the authorities want rental stock to continue falling in the years ahead, they may need to reverse some of these hostile policies which are driving professional landlords away.<\/p>\n However, there are alternative challenges associated with offloading buy-to-let portfolio properties at present. While many of our landlords are disgruntled due to rising mortgage costs, they understand the difficulties of the resale market in the current climate. As a result, they are choosing to keep hold of their current investments for the mid-term until market values strengthen.\u201d<\/p>\n Data sourced from the BVA BDRC and Mortgage Works Landlords are reducing their stock in response to the hostile policies enacted by the past few Conservative governments. This is according to the latest research by London lettings and estate agent, Benham and Reeves, which compared the size of investors\u2019 portfolios between the first quarter of 2022 and the same quarter this year. Throughout England … <\/p>\n\n\n\n
\n Location<\/th>\n Est properties in average portfolio – Q1 2022<\/th>\n Est properties in average portfolio – Q1 2023<\/th>\n Change n<\/th>\n Change %<\/th>\n<\/tr>\n \n East of England<\/td>\n 6.4<\/td>\n 9.2<\/td>\n 2.8<\/td>\n 43.8%<\/td>\n<\/tr>\n \n Yorkshire and the Humber<\/td>\n 10.8<\/td>\n 12.0<\/td>\n 1.2 <\/td>\n 11.1%<\/td>\n<\/tr>\n \n South East<\/td>\n 6.9<\/td>\n 7.6<\/td>\n 0.7<\/td>\n 10.1%<\/td>\n<\/tr>\n \n West Midlands region<\/td>\n 8.5<\/td>\n 9.2<\/td>\n 0.7<\/td>\n 8.2%<\/td>\n<\/tr>\n \n North East<\/td>\n 10.1<\/td>\n 10.0<\/td>\n -0.1<\/td>\n -1.0%<\/td>\n<\/tr>\n \n London<\/td>\n 7.6<\/td>\n 7.5<\/td>\n -0.1<\/td>\n -1.3%<\/td>\n<\/tr>\n \n South West<\/td>\n 7.9<\/td>\n 7.6<\/td>\n -0.3<\/td>\n -3.8%<\/td>\n<\/tr>\n \n North West<\/td>\n 10.6<\/td>\n 8.8 <\/td>\n -1.8 <\/td>\n -17.0%<\/td>\n<\/tr>\n \n East Midlands<\/td>\n 11.8<\/td>\n 7.8<\/td>\n -4.0<\/td>\n -33.9%<\/td>\n<\/tr>\n \n Wales<\/td>\n 12.6<\/td>\n 7.2<\/td>\n -5.4<\/td>\n -42.9%<\/td>\n<\/tr>\n \n England<\/td>\n 8.8<\/td>\n 8.8<\/td>\n 0.0 <\/td>\n -0.2%<\/td>\n<\/tr>\n \n England and Wales<\/td>\n 9.1<\/td>\n 8.6<\/td>\n -0.5<\/td>\n -5.6%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n
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