Landlords Driven Out of the Buy to Let Sector

Buy to let property investment is falling and there is no indication that this situation is going to improve. Property investment has dropped at an alarming rate, with one London property agent claiming landlords are being driven out of the property market because of changes to tax relief and tougher new mortgage affordability tests.

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“In my twenty years of agency the demand for buy-to-let property has never been so low,” says Sacha Moussaieff from Milton Stone.

Mortgage Interest Relief Tax Changes

The government’s new tax changes come into effect next month. From April, landlords will see their mortgage interest tax relief slowly phased out. By 2020, they will no longer be able to use mortgage interest payments to offset taxable income from rental properties. At the same time, the Bank of England’s Financial Policy Committee now has greater powers over the buy to let market, so it is a lot tougher for landlords to secure mortgage funding.

There are of course many landlords who don’t have or need a mortgage, but even these landlords will be affected by the extra 3% stamp duty tax if they decide to sell their properties.

Landlords Expected to Raise Rents

For many landlords, the current climate in the private rental sector has become extremely unappealing. Experts say rents will rise and the number of available rental properties will fall as landlords decide to sell up rather than make a loss on their portfolios.