Many landlords want to exit market but face significant losses

Summarised from 2 outlets · Updated 15 Nov, 07:13 · Archive

Landlords are struggling to sell properties without losses as taxes, regulations and rising costs make buy-to-let unprofitable.

Many landlords are trapped in a 'catch-22' situation where they want to leave the buy-to-let market but cannot do so without taking significant losses on their properties. From April next year, they will face a four percentage point rise in income tax on rental income, the latest in a series of pressures that have hit the sector.

These pressures have accumulated over several years. Tax relief on mortgage interest has been progressively restricted since 2017, and borrowing costs have risen sharply since 2022 when the Bank of England began hiking interest rates. The Renters' Rights Act, introduced in May, has added regulatory burdens by banning no-fault evictions and limiting rent increases to once a year. According to housing platform Zoopla, the average price of flats has fallen 2 per cent in cash terms over the past year, with larger falls in some areas including London, whilst first-time buyer enquiries are down a quarter year-on-year.

One landlord, Helen Dixon, is selling a two-bedroom ex-council flat in Newcastle that she bought for £70,000 in 2021 and rented for £650 a month. After letting agent fees, service charges and insurance, she says she was left with very little profit, and fears the property may now sell for less than she paid for it after tenant damage requiring bathroom, kitchen and carpet replacement.

Many landlords want to exit market but face significant losses — Image: This is Money

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How it is being reported

We're quitting buy-to-let as we can't make a profit: Everything landlords have to pay, from tax to fixing flats trashed by tenantsHelen Dixon has nothing positive to say about her experience as a landlord. She is about to put her second buy-to-let property on the market having sold another earlier this year.This is Money · 15 Nov, 07:00
The Catch-22 situation landlords are stuck inMany landlords want to exit the market because of extra taxes and regulations – but can't do so without losing moneyThe i Paper · 15 Nov, 05:00

In this story: Bank of England · Zoopla · Wandsworth · London · Newcastle · Helen Dixon · Alfie Higgins

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