Buy-to-let landlords get cold feet

Published by Stephanie Hawthorne on 21 May 2018.
Last updated on 21 May 2018

Houses for let

Landlords are retreating from the property market and over half of UK investors no longer see it as a good investment, two new surveys have revealed.

Rathbone Investment Management polled more than 1,000 investors and 500 high-net-worth (HNW) individuals in the UK and found that 38% of investors with a high net worth of £100,000 or more in the UK no longer viewed property as a good investment and while 25% of HNW investors own buy-to-let properties, just 7% plan to increase their portfolios.

This comes in the wake of last week’s research from the National Landlords Association (NLA). It predicts homes suitable for first-time buyers could flood the market in the coming year as new figures show approximately 380,000 landlords (19%) intend to offload property.

Figures from the NLA indicate that 45% of landlords who intend to sell property in the coming year plan to sell individual flats and apartments, with 33% looking to sell terraced homes – both of which are typically affordable and attractive options for those taking their first steps on the property ladder.

Changes to the tax treatment of buy-to-let investments introduced by the government over the past few years, as well as the introduction of new regulations by the Prudential Regulation Authority affecting portfolio landlords, have led to many investors now re-evaluating the cost-effectiveness of property as an investment.

Robert Szechenyi, investment director at Rathbones, says property investment is making less sense: “Not only are the returns now being impacted by an increased rate of tax, but they can also prove high-risk investments due to a lack of diversification.

“Property investments require a large amount of capital to be held in one single asset, and landlords will often hold a number of properties within one region.

“Investors who are looking to invest in property, should make sure to assess their risk appetite, look at all alternative options and make sure this property is held within a well-diversified portfolio of investments.”

 

 

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