Landlords Will Sell Due To BTL Tax Restrictions
According to a business insurance firm 26% of landlords have every intention of selling at least one or more and in many cases leaving the sector this year due to BTL Tax Restrictions.
The firm undertook a survey with 800 investors and found that because of the ever increasing BTL tax restrictions coupled with the uncertain economic situation, around 82% of landlords have no plans to buy any new properties throughout 2020.
A paltry 13%stated that they would indeed buy at least one more property this year.
The major reasons why landlords will be selling properties are the punitive tax increases and changes, ever changing government legislations constantly dumped onto the private rented sector and the banning of admin/tenant fees.
The other reasons for selling up from the survey include increasing rental costs – 10%, turning their investments into cash – 9%, the fluctuating economic situation – 5%, and the slowing down of house price growth – 4%.
The survey also uncovered that around a third of investors said that they had experienced a lower rental yield in 2019, which undoubtedly will lead to further property sales within the sector.
27% of landlords predict that they will have to face a reduction in rental yields throughout the year with one in five expecting of around a 5% fall, whereas 6% are forecast a drop in rental yield between 5 and 10%.
Just 2% of landlords believe that the reduction in rental yield will reach between 10 and 15%.
CEO of the business insurance firm, Bea Montoya, said: “Tax increases imposed by the government are proving counter-productive for landlords, while ongoing political and economic uncertainty hasn’t been providing landlords with the confidence they need to stay in the market.
“Any tenants should be made aware of plans to sell as early as possible, and given reassurance their tenancy still stands. When it comes to selling, landlords need to understand any tax implications involved, such as capital gains tax. If the property is sold for more than it was paid for, there will be a capital gains tax liability.”