The number of buy-to-let landlords exiting the private rental sector in Britain is increasing, according to the Association of Residential Letting Agents.
In fact, last month, the total number of investors leaving the market was at its highest since the ban of letting agents’ fees was announced in November.
According to ARLA, an average of four members per branch sold up in March, in comparison to the three per branch recorded in February. ARLA said it is concerned that the private rental sector is becoming less attractive to investors.
The March report also indicates that the number of agents reporting tenants negotiating rent reductions increased month-on-month, from 3.6% to 2.2% in February. 25% of letting agents also said that they saw landlords increasing rents in March.
This means that the number of landlords increasing rents has actually dropped from the 32% seen in March 2016.
In addition, the supply of rental stock has remained stable with the number of properties being managed per branch staying constant with the previous month. Agents are managing 183 on average, while in March 2016, this figure stood at 169, indicating that the supply of rental stock has risen by 8% over the last 12 months.
David Cox, ARLA Chief Executive, noted: ‘It’s concerning that, despite supply increasing over last year, stock failed to return to the market after dipping in February. When we also consider that this is coupled with a rise in the number of landlords selling their buy to let properties, this is bad news for those searching for a rental property.’
‘The introduction of mortgage interest relief means the market is becoming less and less attractive to investors and it appears some landlords are, as we predicted, choosing to exit the market rather than pay the higher taxes,’ he continued.
Concluding, Mr Cox said: ‘Following the announcement of the ban on letting agent fees, we expect the situation to only get worse for tenants when inevitably the costs are passed onto tenants through higher rents. However, it’s positive that more tenants are taking action and negotiating rent reductions before the consultation ends and they see their rents increase.’