The proportion of former rental properties moving into the sales market is at its highest on record, suggesting that more landlords are selling up, revealed the latest data from Rightmove.
According to the property website’s research, nearly a fifth (18%) of homes currently for sale were previously available on the rental market, compared with 8% at this time in 2010.
The trend is most prominent in London, where nearly a third (29%) of all homes for sale were previously available on the rental market.
According to the property website, the increase in rental properties being listed for sale could be due to the rumoured changes to the capital gains tax (CGT) system expected to be heard during this year’s autumn statement.
However, Righmove data indicates that the previous five-year average for homes switching from the rental market into the sales market is 14%, suggesting that despite the recent spike, the sector is seeing an increasing trend, rather than a sudden mass exodus of landlords.
Tim Bannister, Rightmove’s property expert, said: “In recent years, it has become more attractive for some landlords to leave the rental sector rather than to continue to invest in it, due to rising costs, taxes, and legislation.
“A healthy PRS needs landlord investment to provide tenants with a good choice of homes.
“We’ve seen over the last few years how the supply and demand imbalance can contribute to rising rents, so there is a worry that without encouragement for landlords to stay in rather than leave the rental sector, it is tenants who will pay the price.
“However, despite the trend of more landlords choosing to sell up, it doesn’t appear to be a mass exodus, and we will need to monitor the longer-term impacts of what happens to the rental supply that is put up for sale.
“In any case, we hope the government is considering ways it can support landlords and the PRS ahead of the autumn statement.”
Marc von Grundherr, director of Benham and Reeves in London, added: “The potential equalising of CGT is, of course, a concern for many landlords.
“If the Labour government was to follow through with it, it could make for a significant increase in the tax paid by the average landlord when the time did come for them to exit the sector.
“This would be yet another blow to those who provide vital housing stock that is sorely needed within the rental sector, following a string of legislative changes already introduced in recent years to dent profitability.
“Despite this, we’re simply not seeing the exodus of landlords that is so often reported, as despite such changes, BTL remains a strong investment.
“It’s certainly one that most take with a very long-term view and they expect ups and downs, but generally speaking, the returns are consistently good.”
