The percentage of landlords in central London who intend to sell has quadrupled since last summer’s Budget, the highest rise in the UK, new research shows.
According to the National Landlords Association, the number of landlords looking to sell in the capital has shot up from just 4% to 19% since last summer.
The rise in the number of landlords looking to sell is a pattern witnessed across the UK, suggesting the Chancellor’s changes to mortgage relief and stamp duty are likely to have their intended impact of reducing growth in the buy-to-let sector.
The number of UK landlords looking to sell since last June has increased from 7% to 12%
Landlords with property in the North East saw the smallest increase compared to other regions of the UK, up 17% in June to 24% in January.
The East Midlands, Wales, the North West, the South East and outer London all saw a rise in the number of landlords looking to sell of 13%.
The 3% increase on stamp duty is set to take effect from 1 April as part of the government’s attempt to curb the buy-to-let market and free up property for first-time buyers. The basic rate of tax relief landlords can claim on properties is also set to fall to 20% from April 2017.
The restriction to mortgage interest relief for individual residential landlords could leave many worse off, forcing some basic rate tax payers into a higher tax bracket and leaving higher and additional-rate payers with considerably bigger tax bills.
The NLA has labelled the changes the Turnover Tax, because landlords’ tax will be calculated on the rental income they earn, rather than their profits.
Stamp duty changes have also been criticised as they could lead to a rise in rents as landlords look to claw back money. If landlords are forced to sell this could lead to a reduction in housing stock, also forcing up rents.
Richard Lambert, chief executive of the NLA, said: “Local property markets vary greatly across the UK, but we are seeing a loss of confidence across the board as many landlords realise they won’t be able to remain in the market.
“If landlords follow through with their intentions over the coming months this could lead to a massive sale of property, as we have previously warned. However, this may not be a straightforward process, especially for those with stock in low demand areas.
“We urge those considering selling up to think about when they will need to do so, and to plan ahead now in order to minimise the risk of losing money as a result of a failure to sell”.