The government is being encouraged to do more to reverse the increasing trend of buy-to-let landlords exiting the private rented sector (PRS), owed largely to an increase in regulation and tax changes.
A number of BTL landlords have divested their portfolios and left the PRS in recent years and this has led to a sharp drop in the supply of much needed privately rented homes across many parts of the country.
According to the latest English Private Landlord Survey Report, 10% of landlords plan to sell all their properties and exit the PRS over the next two years, which is up from the 5% who replied in this manner when asked in 2018.
More than half – 55% – of those planning to sell up identified recent legislative changes, followed by forthcoming legislative alterations, such as the scrapping of Section 21, as the main reason for fleeing the market.
Overall, just 11% of landlords want to bring more property into their portfolio, while 12% want to decrease their number of properties. Almost half – 48% – of respondents have no plans to change the number of properties they own.
The survey also reveals that the average total gross rental income is £17,200, which is up on the £15,000 calculated in 2018.
More than half – 56% – of landlords have a rental income of less than £20,000 and 29% bring in between £20,000 and £49,999.
Landlords earning greater than £50,000 from their portfolio account for 15% of the survey participants.
The government estimates that, on average, landlords earn 47% of their total income from property – an increase on the 42% recorded in 2018.
Maxine Fothergill, ARLA Propertymark president, commented: “As highlighted in the report, a large proportion of private landlords are retired, and the majority take home a gross profit of £20,000 or less a year and rely on rent as an income.
“Consequently, as landlords are persistently hit with legislative and tax changes, financial obligations are growing and incentives are non-existent, pushing many to withdraw their homes from the sector.
“Landlords have reported within the survey that for those who are going to leave the sector, recent and forthcoming legislative changes were the driving key factor to doing so.
“Urgent action is needed from the UK government to maintain existing investment as any further reduction in supply could have a detrimental ramification for the housing sector and a rise in those facing homelessness will be inescapable.”