Confidence within the buy-to-let sector has been reported to have taken a hit most recently; a direct result of both the present and upcoming changes highlighted in taxation for the sector. Whilst initially it had been seen that confidence remained high, the new research, produced by PropertyLetByUs, has highlighted how many landlords are looking to re-evaluate their models so as best to create plans for their continued commercial success.
In fact, the report highlights a very worrying statistic – only one out of five landlords actually consider the buy-to-let sector as one where there is money to actually be made. This comes in contrast to the recently reported figures of those procuring further buy-to-let assets in the build-up to the reforms laid out by the Chancellor.
With 43% of landlords reportedly considering the concept of moving their assets into the vehicle of a limited company (a move to overcome the tax changes), it is clear that landlords are perceiving the changes as something of a considerable threat to profitability in the industry under the new reforms. Additionally, circa 5% of landlords have actually sold some of their buy-to-let assets as a direct result of the increased burden of tax, with 6% planning to move their investments from property, and instead look into stocks and shares as the way forward.
Of course, this is all merely based on forecasts in the industry as, right now, only one out of six landlords have actually reported a drop in profitability, with many already having plans laid out to counter tax rises and continue their profitable business model – part of this may very well see an increase in rents to ensure a level of income that can create profits when accounting for the increased burden of taxation.
In the long-term, the figures do, however, highlight a foretasted reduction in the availability of rental property, with the industry indeed facing a drop in confidence. At the same time, however, with demand rising and supply expected to remain stagnant, those with buy-to-let properties may well be facing a market whereby increased rents will be possible due to the level at which demand may outstrip supply – thus making the industry profitable and inviting as an investment.