Buy-to-let landlords exiting the property market lose up to £10,000 on their investment
Buy-to-let landlords exiting the property market lose up to £10,000 on their investment, coming as property values fell at their fastest for 14 years last month, data from Cornerstone Tax 2020 reveals.
New data has revealed that Britain’s landlords are now losing an average of £10,000 on their investment when selling their property.
This comes as a further financial blow to Britain’s landlords, with many forced to sell due to rising interest rates and the proposed Renters Reform Bill – all factors that have contributed to making some buy-to-lets seemingly unprofitable.
Data from the UK’s leading tax specialists, Cornerstone Tax 2020, has revealed that only 1-in-5 landlords say their investment has been profitable in 2023, with a further 1-in-5 saying they became landlords without sufficient knowledge and lost thousands as a result.
According to estate agents Hamptons, so far in 2023, buy-to-let properties have yielded investors an average profit of £94,800, down 10.1% from a record £105,300 profit made in 2022. The 10.1% drop in value now means that landlords today are making the same gains as those selling in 2016, despite significant increases in house prices since then.
Regionally, Hamptons has reported that smaller year-on-year profits were recorded in every region across England and Wales for the first time since the pandemic. Landlords in the North East were the hardest hit, experiencing a year-on-year fall of 15.7%.
As a result, there is a worsening supply and demand issue for renters in the market with around 35,000 buy-to-let landlords coming off fixed-rate mortgages each month and being faced with interest rates of over 6% while remortgaging.
Subsequently, Hamptons has revealed that almost 100,000 landlords a year are expected to leave the market in the next half-decade. However, in a last-ditch attempt to offload their properties and make a profit, 6% of investors in Hamptons’ analysis sold their buy-to-lets for less than they bought them for.
This highlights that landlords selling up may have missed the peak of the market.
Chairman of Cornerstone Group International, David Hannah, discusses the future of the UK’s rental market:
“Concerningly, I fear that increasing mortgage costs will be the final straw for Britain’s landlords.
“They have now experienced their lowest profits since 2007 and face further government red tape.
“Our research shows that many landlords were not prepared to deal with the current obstacles facing the rental market as one in five say they became landlords without the sufficient knowledge needed and have lost thousands as a result.”
Kindly shared by Cornerstone
Main article photo courtesy of Pixabay
