Are landlords really planning to exit buy-to-let en masse? We asked them about their plans

At the National Landlord Investment show in London, attendees were aware of the challenges facing the industry, but mostly had no intention of exiting.

This is Money visited the exchange to take the temperature of the buy-to-let market after rumors that large groups of landlords are considering selling.

Our reporter noted that despite rising mortgage interest rates, the abolition of the landlord levy and the prospect of increasing regulatory pressure, the sector is holding up.

At the event at London’s Old Billingsgate market, many of the landlords we spoke to were cautiously confident.

Several attendees even had the intention of buying their first owner-occupied home, disproving the theory that becoming a landlord is no longer seen as a worthwhile investment.

Kelly-Marie Alleyne is the general manager of her own real estate inventory company and now plans to become a landlord herself.

“It’s definitely a sustainable market,” she told This is Money. “There has been a lot of negative press about taxes and EPC laws, but the demand for housing is there.”

Under new regulations, landlords must get their properties on a C energy performance certificate by 2025 for new leases and by 2028 for existing leases.

Viv Bridge has been a homeowner for eight years and has a long view on the market

Alleyne is not alone in her positive outlook. In the latest survey of private landlords, commissioned by the Department for Leveling Up, Housing and Communities, nearly 70 percent of landlords said if a property of theirs became vacant, they would re-let it rather than sell it or leave it blank.

And data shows that the sector has grown in England. The number of households occupied by private tenants in England has risen from two million in 2000 to 4.61 million in 2022, according to Statista.

“I know everything in the news says it’s absolute chaos, but as long as you manage it well, it’s not,” adds Ash, a landlord who owns several Midlands properties – both residential and commercial.

‘If you pay a little attention [on the regulatory changes] and you can change things accordingly and that’s fine.”

Others share a similar view. They view real estate as a long-term investment, and while conditions are tough right now, it’s still a worthwhile venture.

Viv Bridge has been a multi-home landlord for eight years. They’re all within five miles of his home, so he can be on hand if something goes wrong.

“I’m looking at expansion,” says Bridge. “It’s a long game and I’m not as young as I used to be, but I’m willing to think about it for 15 to 20 years.

“Demand will be around for a lot longer and I think the starting point for London is around a £43,000 deposit. [the average first time buyer deposit in the capital is around £125,000] making it more likely that more people will rent longer in the future – which may not be a good thing in itself, but here you go.”

While some landlords are planning to downsize their portfolios, most would prefer to see industry regulation change

Higher landlord levies appear to be a bottleneck

The main source of complaints from landlords has been changes in the way their taxes work.

Landlords are now taxed on the income from their rental properties, not the profits. Previously, they could deduct mortgage payments from their income, which meant it was tax-free and significantly reduced their bill.

There are still a number of deductible expenses that you can deduct from the rental income before tax, including rental agent and management fees, insurance costs, and general maintenance, but the cost difference is significant for many.

Elliott Altman, a landlord and property manager, admits this has been the hardest buy-to-let. After nearly thirty years in the industry, he says the combination of increased regulatory pressure has reduced tax incentives and tenant frustration with higher prices and lack of availability.

“It’s just a really bad time,” he says, adding that many of his property management company’s landlords are looking to sell. However, he does the opposite and looks for opportunities to grow his buy-to-let portfolio.

‘No fault’ evictions a cause for concern

Not everyone shares his optimism. Enoch Rodriquez has been a landlord for over 18 years and currently owns four rental flats in Hertfordshire, as well as a collection of garages.

He first became a landlord to build a deposit and get up the housing ladder himself, but is now trying to retire from the industry.

There’s too much legislation for small landlords to keep up with, he says, in addition to the tax changes.

He is also concerned about his ability to leave the industry if the proposed changes to Article 21 are introduced.

If the rent reform bill passes, it would remove landlords’ right to initiate no-fault evictions, leaving landlords like Rodriquez to wonder how easily they would get their property back from tenants.

The government has since debunked plans to make it easier and faster for landlords to evict antisocial tenants.

“If I wanted to sell one of my properties to free up money to put my daughter down to buy a house, it’s going to be much more difficult,” he says.

“If I had the money in stocks, it would be easy.”

Similarly, Simon, who has been a landlord for 40 years, says he wants to retire from the industry.

He currently owns six properties and is accelerating his exit plan to sell at least some of them due to what he sees as the increased burden on landlords.

“You give 40 percent [of your income] to the government,” he says. ‘I just have to sell if a building becomes vacant.’