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Quarter of landlords planning to quit UK market this year

By Marianne Curphey

Sale of investment properties could put half a million homes up for sale

A quarter of UK landlords plan to cash in by selling at least one property this year, potentially putting half a million homes on the market, according to new research by landlord insurance provider Simply Business.

The survey of 800 landlords revealed that with uncertain market conditions, 82 per cent of landlords did not plan to buy more properties in 2020. Just one tenth said they would buy another property this year, while a third reported a decrease in their rental yield in 2019.

The top reasons for wanting to sell up were tax increases and government reform, such as changing House in Multiple Occupation (HMO) licensing, which added new stipulations on the minimum size of rooms, as well as banning admin fees. Well over a tenth cited these reasons.

Other reasons include rising rental costs (10 per cent), cashing in on their investment (9 per cent), economic instability (5 per cent) and slowing house price growth (4 per cent). This comes after a third (35 per cent) also reported a decrease in their rental yield in 2019, which adds to the desire to sell.

Looking ahead to 2020, more than a quarter of landlords expect to see a further decrease in their rental yield.

Bea Montoya, chief operating officer at Simply Business, said: “Landlords around the country are telling us that government reforms, tax increases, and rising rental costs are forcing them to put their investments up for sale.

"The tax increases imposed by the government are proving counterproductive for landlords, while ongoing political and economic uncertainty hasn’t been providing landlords with the confidence they need to stay in the market."

House prices continue to rise

Meanwhile, the average price of a UK home is £238,963, according to the Halifax House Price Index released on January 8.

UK house prices in December 2019 were 4 per cent higher than in the same month a year earlier and on a monthly basis, house prices rose by 1.7 per cent.

Russell Galley, managing director, Halifax, said: “Looking ahead, we expect uncertainty in the economy to ease somewhat in 2020, which should see transaction volumes increase and further price growth made possible by an improvement in households’ real incomes.“

He said longer-term issues such as the shortage of homes for sale and low levels of house-building will continue to limit supply, while the continuing challenges faced by prospective buyers in raising deposits will limit demand. "As a result, we expect a modest pace of gains to continue into next year,” he added.

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