A growing number of landlords in England are preparing to sell their rental properties this year, with a new survey revealing that one in five intends to exit the market.
The latest findings from property lender Octane Capital suggest that the primary motivation behind these sales is the anticipated impact of the forthcoming Renters’ Rights Bill. However, despite concerns over regulatory changes, the majority of buy-to-let investors remain committed to the sector, with 90% maintaining stable portfolio sizes over the past year. Only 7% of landlords have reduced their holdings, according to the survey.
Landlord Exodus ‘Exaggerated’
Jonathan Samuels, chief executive of Octane Capital, downplayed fears of a mass landlord exodus, stating that such concerns have been overstated.
“It’s fair to say that the landlord exodus that has been so widely talked about in recent years has been largely exaggerated, and the vast majority of buy-to-let investors still view the private rental market as a worthwhile endeavour,” he said.
However, he warned that government policies may be discouraging investment in an already undersupplied market.
“There’s no doubt that the government’s consistent campaign to deter landlords from the sector through legislative changes has had an impact,” he added. “Unfortunately, it looks as though more could choose to exit during 2025, and the key reason for this decision is the Renters’ Rights Bill.”
Concerns Over Tenant Welfare vs. Landlord Rights
While the proposed reforms aim to improve conditions for tenants, Samuels cautioned that they may inadvertently worsen the rental crisis.
“The concern is that landlords have been largely ignored with respect to the intended changes,” he said. “Without the vital supply of rental properties reaching the market, tenants will be worse off than they may be now.”
Key Factors Driving Landlord Sales
The survey found that 21% of landlords plan to downsize their portfolios in 2024, while 75% intend to remain in the private rental sector and 4% may expand.
The Renters’ Rights Bill is the primary driver for those looking to sell, followed by concerns about a potential Labour government and landlords approaching retirement.
The removal of Section 21 “no-fault” evictions is seen as the most significant challenge posed by the Bill. Additional concerns include new restrictions on rejecting tenants who receive benefits or have children, as well as the end of short-hold tenancies.
With further changes on the horizon, the rental market faces an uncertain future, as landlords weigh the risks of staying in or leaving the sector.