The National Residential Landlords Association (NRLA) Quarter 3 survey asked why Newark landlords are looking to sell their investment properties.
Quarterly research conducted by the NRLA consistently finds the main reasons for landlords adjusting their portfolio are:
- Increasing landlord costs
- Changes in regulation
- Changes in tax
Analysis from the NRLA Quarter 3 survey shows that these same 3 reasons are still the highest amongst landlords who have sold in the previous 12 months. In contrast, landlords who have bought property cited reasons such as “changes in local property market conditions”, indicating they were in good financial stead to take advantage of the market.
The London School of Economics (LSE) research offered an opportunity to ask landlords who had completely left the sector what were the biggest reasons behind that decision. Once a NRLA member ceases being a landlord (as opposed to simply reducing the size of their portfolio) then of course there is no reason for them to participate in the surveys before their membership lapses.
So, among this group of former landlords surveyed by the LSE, the top 3 reasons for exit closely mirrored the views of regular NRLA surveys of active landlords. There was however an increased emphasis on the impact of tax changes, being cited as the second most important reason as opposed to third. This could highlight the magnitude of tax changes upon landlords’ decisions to leave the sector.
In conclusion, former landlords were found to have had smaller portfolios than current active landlords, with the income provided by their rental properties typically not being their primary source of income. This grouping were also more likely to be older and collecting pensions than active landlords. This suggests that many landlords are selling their buy-to-let properties to supplement their income upon retirement as the change of legislation means the investment simply is not worthwhile.
When asked for their reasons on why they are leaving the sector, this grouping of landlords echoed similar sentiments to active landlords who have reduced their properties. Increasing landlord costs, tax and regulation were the most common reasons for leaving the sector, with tax being ranked higher amongst former landlords than active landlords. It is tax and the increase in costs associated with the private rental sector rather than the economic impacts of Covid-19 which is driving landlords towards the exit.
At a time when Newark landlords are looking to sell, alternatives are needed to make their investment work. So, if you are in that bracket then contact us, we may have a solution to your problem.