Head of Property Litigation Adam King was quoted in an article in The Telegraph titled ‘Why 2023 could bring the collapse of buy-to-let’.
The article says that properties owned in investors’ own names rather than held by companies are becoming loss-making. This is mainly due to two factors: the slashing of tax relief on mortgage interest and the rise in mortgage costs.
The article states that research consultancy Capital Economics estimates 365,000 buy-to-lets will become loss-making by the end of this year.
Adam says in the article: “I have clients looking to sell all of their properties and close their businesses because the sector is no longer viable for them.”
The article continues by explaining that in addition to these issues, the regulatory burden on landlords is tightening. The government is planning to scrap ‘no-fault’ evictions of tenants, making it harder to remove tenants (which you can read about in our article, ‘Government planning radical shake-up of private rented sector’). There is also a new requirement for all privately rented properties to have a minimum Energy Performance Certificate rating of band C by 2028. The Telegraph estimates this may cost landlords up to £10,000 per property to comply with.
The article concludes with a quote from Adam saying: “There is no positivity, from a landlord’s perspective right now, everything is negative.”
You can read the full article here (subscription required).
If you require further information about buy-to-let property, please contact Adam King at [email protected].
Disclaimer: The above is merely general guidance and should not be relied on as formal advice. We suggest you take professional advice before taking any action in relation to the issues discussed above.