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RICS warns new rules and tax changes will force out many landlords
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Original Source: Letting Agent Today.
Original Author: Graham Norwood.
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Some 61 per cent of chartered surveyors believe there will be a net exodus of landlords over the coming year thanks to regulation and tax changes aimed at the sector.
The Royal Institution of Chartered Surveyors asked its members whether there would be more landlords quitting than joining in the next 12 months – only 12 per cent believed there would be more entrants than those leaving.
Moreover, for the next three years, 52 per cent felt there would be a net reduction in landlords, with only 17 per cent suggesting a rise.
Given the likely resulting supply and demand mismatch in this area, respondents predicted that over the next five years rental growth would outpace that of house prices – rents would rise by an average of three per cent per year, compared to two per cent for sale prices.
“It is interesting that over the medium term, the conclusion of the latest survey is that rental growth is likely to outpace increases in house prices. Although the Build To Rent offer is now stepping up a gear, there clearly is some doubt as to whether it can do so at a fast enough pace to address the shortfall which may result from the more hostile environment for buy to let investors” explains Simon Rubinsohn, RICS’ chief economist.
Meanwhile Paul Bagust, RICS global property standards director, says the number of landlords leaving the sector is concerning.
“A functioning private rented sector is crucial to a healthy housing market and it’s predicted that over 20 per cent of all households will be [privately renting] by 2020. The sector is extremely diverse, including many one-home landlords” he says.
RICS is currently working with other organisations in the sector to develop a revised Code of Practice for the private rental sector “to raise standards for both consumers and landlords, bring clarity to those already in the market on various policy measures, and encourage landlords back into a professionalised market.”
