An alarming statement by the CEO of the National Landlords Association (NLA) has painted a worrying picture of the current state of the buy-to-let sector.
According to Richard Lambert, confidence in the market is at an all-time low and is, ‘worse than levels witnessed during the financial crash.’
Mr Lambert will address peers at the Building Societies Association’s annual meeting and is expected to say that confidence in landlords’ business expectations have slipped by more than a third in the last year. He believes it is fallen from 67% to a record-low of 43%.
If he is to be believed, the current level of confidence in the BTL sector is 5% lower than levels seen after the financial crash of 2007.
Also in his address, Lambert will highlight how the actions of the Chancellor in the Budget and Autumn Statement has led the NLA to backtrack on predictions of growth in the sector. Originally, the NLA suggested that the sector would grow by more than one million households in the next five years.
Now, the firm suggests that if landlords act as predicted, there will be a sharp sell-off of properties of up to 50,000 in the next year. This will be followed by another 100,000 properties sold every year thereafter to 2021.
Landlords’ confidence, ‘at all-time low’
Lambert will also present findings from the NLA Quarterly Landlord Panel survey, which shows:
- The number of landlords looking to sell in the next year has doubled from 7%-19%
- 28% of landlords do not plan to add to their portfolio
- 10% plan to reduce their housing stock
- 5% intend on selling their entire property stack
‘Two speeches from the Chancellor in 2015 have led to a crisis in confidence greater than when all but a few BTL products were immediately withdrawn from the market following the 2007 financial crash,’ Lambert said. ‘Up to half a million properties could come onto the market as a result of the Summer Budget and Autumn Statement, which the Chancellor will no doubt deem a success.’
Continuing, he said, ‘there is no guarantee that these will be the one or tow-bedroom flats of small houses that will appeal to first time buyers, especially as landlords are more likely to offload less desirable stock in less desirable areas.’
‘We’ve always said that Mr Osborne is blinded to the impact of his decisions by his commitment to homeownership. He may have intended to focus on the small-scale part-time investor, but it’s the larger and more professional landlords who will be hit worst by cuts to mortgage tax relief and increases to stamp duty and who appear most likely to leave the sector,’ he concluded.