Increasing number of landlords selling their properties
January 6, 2008
According to a recent report a growing number of landlords are deciding to sell their properties, with levels now at a three year high. Officials from the Royal Institute of Chartered Surveyors stated that the increasing number of landlords deciding to sell up was the result of higher interest rates coupled with tighter borrowing policies from lenders. The RICS stated that new landlord instructions dipped in the quarter to the end of October.
There are now fears that the slump in the buy to let sector could affect the wider housing market. There have been three consecutive rises in the level of landlords deciding to sell their properties when the lease expires, and this has now risen from 6.1% to 6.5%. This is the highest level since January 2005 according to reports. One industry official stated that the uncertain financial markets were putting off potential investors.
Rics housing spokesman Jeremy Leaf stated: A combination of tightening lending criteria and successive interest rate rises has started to hit the buy-to-let market.”
He added that tax changes could hit the market even harder in the coming year, stating: “With the drop in capital gains tax due in April next year, many landlords will resist selling until the spring.”
The survey also showed that although rents continue to rise the rate of these increases is slowing down. The slowdown in buy to let is a stark contrast to the popularity it has seen over recent years. Only 20,000 buy to let mortgages were taken out when they were first introduced in 1996. This had grown to 990,000 by September 2007. However, many lenders have taken their buy to let products off the market altogether as a result of the financial turmoil caused by the credit crunch.
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