New research has found one in five landlords are set to reduce their portfolio size in an effort to combat the cost of living crisis.
This may offer a much needed supply boost to the residential property market – something potentially compounded by the upcoming requirement for all residential rental properties to have an EPC rating of C or above by 2025 which could leave many landlords will little option but to sell.
The research, carried out by Handelsbanken, also found more than a third (34%) are cutting back on buying properties in cities as the market adjusts to changing employment practices, as more people are working from home.
Almost all (93%) respondents say the current market outlook has impacted their portfolio/ investment strategy in some way, with more than half (53%) concerned they will experience more void months.
More than one in five (21%) report that one or more mortgage deals have fallen through, with two in five (40%) adding their lender has increased the loan rate on one or more properties in their portfolio.
As a result, 45% say they are planning to purchase lower-value properties to remain under the Stamp Duty Land Tax (SDLT) threshold to combat rising costs.
James Sproule, UK Chief Economist at Handelsbanken, said:
“The property market is entering a period of increasing uncertainty, with house prices in some areas already falling and a rising regulatory burden being seen by some landlords as a reason to reduce their exposure to the market.
While the ongoing cost of living crisis might be seen as the driving factor in the buy-to-let market, equally important are the post-pandemic movement back into cities, potential buyers delaying purchases and thus looking to rent, and fewer properties, meaning those who do persevere, are likely to see higher yields.”
