Fewer landlords but bigger portfolios

There are now 220,000 fewer private landlords and close to 160,000 fewer rental homes than in 2017.

The finding comes from estate agent Hamptons International in its latest Market Insight.

It concludes that landlords are leaving the rental market because of a series of

tax and regulatory reforms targeting at them.

‘Buy-to-let reached a peak of popularity in 2017, when 2.88m people were landlords. During the 2017-2018 tax year, the phased cuts to landlords’ mortgage tax relief began to bite, compounding the impact of the stamp duty surcharge on second properties that was introduced in 2016.

‘These and other tax changes were designed to eat into landlords’ profits, making it less likely that they would compete with first-time buyers for smaller properties. A tightening of the capital gains tax rules for landlords who have lived in their buy-to-let property at some point, which takes effect in April, is a continuation of this policy’.

There are signs that landlords who want to stay in the market are expanding their portfolios, suggesting the sector may be professionalising, said Hamptons. Some 30 per cent of landlords now own more than one property – double the percentage in 2011. The average landlord now owns 1.93 homes.

Departure of landlords is shrinking the private rented sector and rents are continuing to rise. Over the past 12 months, the average rent in Great Britain has risen by 3.6 per cent to £998 pcm, said the firm.

The landlords with the largest portfolios – 2.05 homes on average – are investors in the North East.

Investors in Yorkshire and the Humber and London own an average of 2.03 homes and 2.01 homes, respectively. By contrast, investors in Scotland or Wales are least likely to have big portfolios and own an average of 1.83 homes.

Scotland and Wales are also the regions where rents are growing at the slowest pace.

In January 2019, the average rent in Wales was £652 pcm, it is now £659 pcm, 1.2 per cent higher. In the south west, however, the average has jumped by 6 per cent from £784 pcm to £831 pcm over the past 12 months. In Greater London, there was an increase of 4.1 per cent, from £1,714 pcm to £1,783 pcm. The North is the cheapest place to rent, with a monthly average of £646 pcm, up from £625 pcm.