Increasing Number of Landlords Looking to Leave Sector, Law Firm Warns
One of the UK’s leading law firms has warned that it is seeing an increasing number of private landlords looking to reduce or sell off their property portfolios.
Irwin Mitchell claims that this is a direct result of a host of changes being forced on landlords by the Government, which have made buy-to-let a less profitable investment option.
However, the firm warns that disposing of a buy-to-let portfolio may not be straightforward, with landlords being hit by hefty Capital Gains Tax (CGT) bills.
Irwin Mitchell says that landlords are being affected not just by legal changes, but also by growing anti-sentiment amongst the public being reported in the media, against the backdrop of the housing crisis.
In recent months, landlords have had to contend with more stringent mortgage lending, particularly for those with four or more properties, higher Stamp Duty costs on buy-to-let properties, the reduction in mortgage interest tax relief, and the possibility of rent controls, as proposed by the Labour Party at its recent conference in Brighton.
A Partner at Irwin Mitchell, Jeremy Raj, says: “It’s understandable that landlords who have been hit with some difficult changes to swallow are now thinking of exiting the buy-to-let market, in order to invest elsewhere. We’ve certainly seen an increase in enquiries from landlords worried about the future market.
“However, the CGT liability that will crystallise on each property sale must be factored in when weighing up whether it is best for landlords to divest of their property portfolio.”
He adds: “If the Government really wants to help young people onto the property ladder, it needs to combine the recent disincentives in the buy-to-let sphere with fulfilling its promises to get more housing built.”
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