Since the Government announced last year that tax relief on rental income would be decreased and that stamp duty on buy to let purchases would be increased there has been a significant fall in new acquisitions by new and existing Landlords in the UK over recent months.
In response to the changes to tax , Landlords in the UK are opting to upgrade their existing properties and making the portfolio they have even better, rather than looking to buy more property to expand their portfolio.
A report from Paragon Mortgages shows that only 9% of respondents intended to purchase a new buy to let property in the next three months, which is a figure that is down 14% from the previous quarter.
Now that they changes to stamp duty have been enforced it would appear that more Landlords within the UK are aware of the changes. According to the report, 76% of the respondents were aware of the changes and what the implications are for them personally.
Landlords are now also spending less of their rental income on mortgage repayments, which means that the average net rental yield is remaining at 4.7% for the third consecutive quarter.
John Heron who is the Director of Mortgages at Paragon said;”The Private Rented Sector is facing the prospect of a great deal of change as a result of the significant shift we have seen in fiscal and regulatory policy. Some Landlords are responding to this uncertainty by planning fewer new purchases and investing in their existing portfolios”
By purchasing less property and investing in your existing portfolio, we feel that this can only be an improvement for tenants. The Government changed the rules to allow more individuals to purchase property, rather than having all the housing stock eaten up by Landlords, so with Landlords buying less property and instead opting for improving their existing properties, we can see this as a positive step.
Individuals that wish to purchase their first property can do so, as there will be more housing stock available and for those that wish to remain as tenants, they will have their rental property improved by Landlords looking to invest in making their portfolio nicer.