Why Many Landlords Are Ignoring the Doomsayers and Staying in the Rental Market

Why Many Landlords Are Ignoring the Doomsayers and Staying in the Rental Market

Are landlords leaving the market in droves, as some experts claim? Or are reports of an exodus exaggerated? Let’s look beyond the hype to find out what’s going on.

You may have seen a flurry of headlines lately saying that landlords are leaving the rental sector en masse.

Is it true? Well, data released last month shows that some landlords are indeed selling up.

The number of outstanding buy-to-let (BTL) mortgages fell from 2.039 million in the first quarter of 2023 to 1.98 million a year later. (Source: UK Finance)

In other words, the BTL mortgage market shrank by a small margin.

Meanwhile, July figures from Zoopla showed one in eight properties for sale was previously a rental property. (The property portal expects 40% of these homes to be snapped up by another landlord and remain in the rental sector.)

So, there is some movement. But is it an ‘exodus’ as some people claim? Not quite.

The other side of the coin

If a small number of landlords are calling it quits, that means a large number are holding firm.

What’s driving their decision to play the long game? Quite a lot.

A survey by Paragon Bank asked small-scale landlords (investors with between one and three properties) about their reasons for staying in the BTL sector.

Here are their top five answers.

Demand – 60% said strong tenant demand gave them confidence in the sector. Ironically, if landlords continue to leave the BTL market, this demand will only increase further.

Retirement – 54% said the idea of earning a healthy income in retirement was a driving force.

Property price growth – 47% pointed to the fact that house prices have gone up, up, up in recent decades. UK property values grew by 73% in the past ten years alone.

Ambition to build a portfolio – 40% of those surveyed were keen to build wealth and financial stability proactively.

Prefer property – What’s the best way to save money and see it grow over the long term? Stocks? Shares? Some people find these options risky and prefer tangible assets instead. Of those surveyed, 34% favoured property over other asset investments.

What does the future hold for you?
If you’re weighing up your options in the rental market, talk to us. We can review your current procedures and tax regime and advise on the best path forward.

Call us today to discuss your property portfolio.