As the Renters’ Rights Bill moves closer to becoming law, a report commissioned by HMRC shows that despite repeated Government claims to the contrary large numbers of landlords are planning to sell up.

Housing Secretary Angela Rayner has insisted reforms would only affect ‘a small number of unscrupulous landlords’ and Housing Minister Matthew Pennycook has stated the government ‘sincerely believes’ regulatory changes will not harm the sector through ‘reduced supply.’

A very different picture

The report, which was carried out by Ipsos, however, paints a very different picture. It shows that across the UK, nearly a quarter of landlords intend to reduce their property holdings in the next 12 months, rising to a third (33%) over the next five years, with more than half considering doing so. 56% cite changing property regulations as the key motivation for doing so.

The report reveals, however, that it is not just the rule changes that are the drivers of landlords’ desire to exit the market.

Over half own just a single property, and 52% make less than £10,000 in total annual profit, so any tax increases can have a huge impact. It is why 59% told researchers that changes to tax rules are another primary motivation for selling up.

50% were also concerned about the administrative burden of owning a rental property. Landlords said they were being forced to seek professional tax advice because “doing their own taxes was time-consuming and they had a limited understanding of the process” which was made worse by “frequent changes in tax laws”. Among those handling their own affairs, 40% cite “complexity and lack of clarity of the rules” as their main barrier.

UK Government tax policies are pushing landlords to sell, and the private rented sector is feeling the strain.”

According to Nathan Emerson, CEO of Propertymark, the research “confirms what Propertymark has long highlighted – UK Government tax policies are pushing landlords to sell, and the private rented sector is feeling the strain.”

To add to those costs, the increasingly complex rules in the sector have also resulted in 63% of landlords using estate agents, letting agents or property managers, putting yet more pressure on already squeezed margins.

One landlord summed up the feelings of many, telling researchers: “Being a landlord is detrimental to my health and very stressful. We are not making any money now; it is not a source of income.”

With Labour forcing the legislation through the Lords, the Renters’ Rights Bill is likely to become law this summer.