‘Private landlords are selling up as it’s the most financially viable option’ says Dutton Gregory solicitors

With the introduction of new legislation rocking the rental market, economic uncertainty with the cost of living crisis, and 14 consecutive interest rate rises, there seems to be little choice for some private buy-to-let landlords in choosing to sell up.

Many have been asking whether it is actually beneficial being a landlord in 2023, due to all the constraints, lack of Government help in increasing EPC ratings, and the proposed introduction of the Renters Reform Bill.

Estate agent Savills found that 25,000 homes that were sold in the UK between April and May of this year, were sold by landlords. This had increased compared to the two months prior where 22,000 homes were sold by landlords.

Gina Peters, head of landlord and tenant at Dutton Gregory, said:

“The recent increase in buy-to-let landlords selling their properties could see an alarming reduction in the number of privately rented homes, with private landlords expecting to bank more than if they were to keep their portfolios. However, with more of the population being unable to afford to buy their own home, the UK’s dependency on the rental market is more so than ever.

“This is a really uncertain time if you are a private landlord. Up to the year 2000, property owners were eligible for mortgage interest relief at source, which provided valuable tax relief for higher- rate taxpayers. More recently, changes have also been made to capital gains tax thresholds, and in April 2023 the capital gains tax-free allowance was reduced from £12,300 to £6,000. In April 2024, this will be decreased to £3,000, meaning landlords will have to pay out more in capital gains tax when selling a property.

“Official figures from HM Revenue and Customs, based on capital gains tax data, saw that between 2021-2022, the sell up of properties by landlords was 8.5% higher than what was expected, with 153,000 properties sold. It was also reported that 95% of letting agents had experienced their landlords selling at least one of their properties.

“Meanwhile, the Renters Reform Bill – which is working its way through Parliament, is expected to create a big change to the way landlords can regain possession of their properties. This comes at a time when the backlog in repossession cases to be heard at court is already at record levels.

“Many of our clients are asking what’s next? The Government needs to step up and find a solution so that it remains financially viable for landlords to retain their buy to let portfolio, as it’s critical to a healthy property market.”

Gina has specialised in residential landlord and tenant law for 22 years. She has advised clients through the Landlord and Tenant Act 1985, the Housing Act 1988 and 1996, and the Deregulation Act 2015 – and now the 2023 Renters Reform Bill. Gina also recently released the award-nominated book: ‘Lettings Law for Property Professionals: Your Legal Questions Answered’, which provides a firm basis and reference for many regularly asked about legal topics.

Hampshire-headquartered Dutton Gregory Solicitors is a full-service national legal firm for private and corporate clients. The multi-award-winning practice has offices in Bournemouth, Chandler’s Ford, Poole, Liverpool, London, Winchester, and Woking.