

The number of rental homes has been stuck at the same level for nine years, but the type of landlord investing in the sector has changed, new analysis suggests.
The comments by Zoopla’s Richard Donnell highlights the shift that has taken place in the marketplace, despite supply remaining at 5.5 million homes.
He explained that small one property landlords have shrunk from 80% to less than 50% of the market, while 40% of landlords have no mortgage or borrowing.
Donnell explained that the private rented sector stopped growing in 2016 when tax changes “shifted the business model” and has since been stuck at 5.5m homes, with landlords buying offset by landlords selling.
He said: “There has been no exodus, the people selling are smaller landlords who didn't see buy-to-let as a business; 40% of landlords bought their first property to live in.
“House prices have underperformed in recent years, but higher rents have helped cover rising costs and pushed yields higher."
Tax changes were phased in nine years ago, which meant that landlords could no longer fully offset the interest they paid on their mortgages against their tax bill.
Donnell added: "The catalysts for those selling have been tax changes, rising property running/repair costs, greater regulation around licensing and higher mortgage rates, which have resulted in lower profits/cashflow, with the threat of more to come.”
He went on to say: “Most buy-to-let landlords are aged over 60 years old and are sitting on big capital gains.
"The sector is coming to the end of a multi-year consolidation phase as small landlords leave and bigger landlords consolidate portfolios with a focus on modest leverage and cashflow. 50% of the private rented sector is owned by 20% of landlords with the largest portfolios. Small one property landlords have shrunk from 80% to less than 50%, and 40% of landlords have no mortgage or borrowing.
"Increased borrowing in the final three months of 2024 is down to global uncertainty and weaker equity markets, with residential coming back into the thinking of cashflow-focused landlords. It didn't really stop, but the sector needed to consolidate after more than doubling in size between 2000 and 2016 where the motive was leveraged capital growth-driven returns.
"Those days are now over, there are areas of value in the market where yields are higher. Canny investors will be seeing opportunities in the market, with more homes for sale than over the last seven years, which explains why we have seen an increase in borrowing."
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