New research commissioned by property development firm Accumulate Capital has revealed how tougher taxes and tighter regulations are driving investors out of the buy-to-let market.
The survey of 750 UK property investors found 37% of UK property investors are planning on selling one or more of the residential properties they own in 2020. Of those 61% said this was in response to the increasing regulations and taxes and 21% will instead focus on alternative property investment opportunities, like debt and development finance.
According to Accumulate Capital, 72% believe current tax and regulation measures are unfairly weighted against landlords and 69% say the costs of managing their property portfolio has risen “considerably” in the past five years.
Many landlords said they would not have purchased their properties in the first place if they had known how regulated the Private Rented Sector (PRS) was to become.
Over a third of UK property investors are looking to sell properties in 2020 due to higher taxes and greater regulation.
Problems with UK buy to let investments
The property development firm commissioned an independent survey of more than 750 UK property investors – all of whom own three or more residential properties – about their sentiment towards the country’s buy-to-let (BTL) market.
It found that 37% of UK property investors are planning on selling one or more of the residential properties they own in 2020. Of those planning to sell, 61% said this was in response to the greater regulation and higher taxes they now face as BTL investors. A fifth (21%) said they will instead focus on alternative property investment opportunities, like debt investment and development finance.
Accumulate Capital’s study showed that 72% of property investors consider current taxes and regulations to be unfairly weighted against landlords.
Over three fifths (63%) said they are not considering new buy-to-let purchases as a result of reforms to the private rented sector (PRS) that will be introduced from 6th April 2020. These include mortgage interest tax relief reforms and changes to private residence relief.
Cost of managing buy to let portfolios has gone up
The vast majority (69%) of those surveyed said the costs of managing their property portfolios had increased “considerably” over the last five years. Over half (54%) added that they are prepared to sell properties if further PRS regulation is introduced in the 2020 Budget, scheduled for 11th March.
Overall, 53% of property investors said they would not have purchased their properties in the first place if they had known how regulated the PRS was to become.
Paul Howells, CEO of Accumulate Capital, said:
“Property investors are clearly frustrated by how much red tape there now is within the private rental sector and buy-to-let market. Yes, there is a need for regulatory measures to protect the interests of all parties involved in the property market, but as our research shows, some landlords feel the current system is unfairly weighted against them. What we might see as a result, is investors selling properties and downsizing their portfolios. Indeed, a considerable number of investors are now looking to alternative real estate investment options instead, such as development finance – these provide ways to access bricks and mortar investment opportunities without the complications or costs of actually purchasing the asset.”