Yahoo Finance Michael Gove’s rent reforms are forcing landlords to quit, surveyors warn
Michael Gove’s proposed rental reforms are already forcing landlords to quit the housing market, the Royal Institute of Chartered Surveyors (RICS) has warned, as rising mortgage rates trigger a slump in landlord lending.
Nearly two-thirds of estate agents reported an increase in landlords looking to sell up in April, according to RICS’s closely-watched industry survey. A similar share reported a decline in interest from British landlords looking to buy.
New rental supply continued to fall across the country, with the biggest drop in the South West, the survey found.
RICS warned that Mr Gove’s Renter’s Reform Bill, which includes the flagship policy of scrapping Section 21 “no-fault” evictions, is pushing more landlords to quit the sector as they are also squeezed by rising interest rates.
Tarrant Parsons, a senior economist at RICS, said: “Interest rate rises are also impacting the rental sector and combined with looming reforms proposed in the Government’s Renters’ Reform Bill, landlords are increasingly deciding to leave the sector and sell up property.”
Jason Coombes, of Cottons Chartered Surveyors in Birmingham, warned that government rhetoric around rental reforms has spooked investors. Mr Coombes said: “Fear and lack of leadership from this government has further eroded confidence in the viability of this sector.”
It came as data from UK Finance showed that just 4,948 buy-to-let mortgages were issued for purchase in March, half the number recorded a year ago and the lowest level for the month since records began in 2013.
Remortgages on buy-to-let loans also fell by half to a nine-year low, suggesting landlords are selling up rather than refinancing when their fixed rates expire as rising mortgage costs make it unviable.
The average rate on a two-year buy-to-let loan hit 6.02pc on Wednesday, according to data company Moneyfacts. This was nearly double the 3.59pc average quoted rate at the start of June 2022.
Jean Jameson, chief sales officer at Foxtons, a London estate agent, said landlords are selling up because they cannot afford to refinance when they come to the end of their fixed-rate deals.
He said: “There are a lot of landlords with large portfolios where they don’t have big chunks of equity. They are selling up.”
High mortgage rates are also bringing fresh pressure for homeowners. Mortgage repossessions have jumped to their highest level since the start of 2020, according to UK Finance.
Across the first three months of the year, 1,250 households were repossessed, a 28pc year-on-year increase. However, this number was still well below 2019 levels. The data also showed the first year-on-year drop in savings levels in 15 years.
Eric Leenders, of UK Finance, said: “People dipped into their savings pots to pay their bills and support usual spending.”
