An exodus of older landlords is paving the way for build-to-rent investors and younger landlords looking to capitalise on higher yield properties, according to a big estate agency boss.

The PRS has seen a significant shift as landlords exit due to increasing legislative pressures, tax liabilities, and the removal of mortgage relief, says Spicerhaart’s joint CEO Antony Lark (main image, inset).

“We’re noticing that the level of landlords leaving is higher than anticipated – particularly among those who’ve retired, who need the money to meet rising living costs, or are helping children buy first homes, or who’ve concerns over inheritance tax,” he explains.

Younger landlords under 40 now constitute a much larger proportion of the landlord demographic than in the previous decade.

“The new landlords entering the market are more likely to buy in higher-yield areas further north, such as Stoke-on-Trent and Crewe, where yields can be as high as 9% on a smaller investment, spreading risk over a larger portfolio,” says Lark.

Spicerhaart has seen rents begin to stabilise, he adds. “You might think that rents would continue to rise, having seen a 6.6% increase in the last year, compared to 10% a year ago.

Critical point

Instead, despite significant demand for rental property, we’re seeing this start to plateau as tenants have now reached a critical point in terms of what they’ll pay.”

In some parts of the country, landlords are even having to reduce prices to ensure their properties are let. “However, many landlords are resisting these lower offers, especially those who’ve had to remortgage or have increased costs,” says Lark.

One positive outcome is a reduction in rogue landlords and those unwilling to comply with heightened licensing and regulatory requirements, believes Lark, who adds that there is still a critical need for government policies that incentivise investment in the market, particularly by reviewing the reversal of mortgage tax relief for buy-to-let properties.