Landlords’ confidence in the buy to let (BTL) sector has collapsed to an all-time low and is now ‘worse than levels witnessed during the financial crash’, the CEO of the UK’s largest landlord association told leading mortgage professionals today (2nd February 2016).
Richard Lambert, Chief Executive Officer of the National Landlords Association (NLA), told delegates at the Building Societies Association’s (BSA) annual meet-up for mortgage professionals that confidence in landlords’ business expectations has tumbled by more than a third over the past year* – down from 67 per cent to an all-time low of 43 per cent.
The current level of confidence in the BTL sector is now five per cent lower than levels witnessed after the financial crash in 2007.
Mr Lambert outlined how the actions taken by the Chancellor in last year’s Summer Budget and Autumn Statements has led the NLA to reverse its previous prediction of the continued growth of the private rented sector (PRS) by another million more households over the next five years.
It now forecasts that, if landlords follow through on their intentions, there will be a dramatic sell-off of 500,000 properties in the next 12 months, followed by another 100,000 sold each year to 2021. The net effect will be that the PRS will be smaller by up to 136,000 properties.
He presented findings from the latest NLA Quarterly Landlord Panel survey, which showed:
- The proportion of landlords looking to sell in next 12 months has more than doubled since July 2015 (up from seven per cent to 19 per cent).
- Over the next few years - 28 per cent of landlords don’t plan to purchase any more properties, 10 per cent plan to reduce their portfolio, and five per cent plan to sell up completely.
Mr Lambert said:
“Two speeches from the Chancellor in 2015 have led to a crisis in confidence greater than when all but a few BTL products were immediately withdrawn from the market following the 2007 financial crash.
“Up to half a million properties could come onto the market as a result of the Summer Budget and Autumn Statement, which the Chancellor will no doubt deem a success.
“But there is no guarantee that these will be the one or two-bedroom flats or small houses that will appeal to first time buyers, especially as landlords are more likely to offload less desirable stock in less desirable areas.
“We’ve always said that Mr Osborne is blinded to the impact of his decisions by his commitment to homeownership. He may have intended to focus on the small-scale part-time investor, but it’s the larger and more professional landlords who will be hit worst by cuts to mortgage tax relief and increases to stamp duty, and who appear most likely to leave the sector.
“What happens to the people these landlords house if they still can’t buy and there are fewer and fewer properties available to rent?”
*NLA Quarterly Landlord Panel – Q4 2015 (1364 respondents)