Landlords: Is it time to sit tight or make a move?

Our survey should prompt landlords to review their position carefully. More than 65% of respondents expect to sell some or all of their properties within three years; that does not mean 65% are leaving altogether. These are self-selecting Property118 readers, many of them experienced landlords, and their concerns deserve attention. The right decision depends on cash flow, borrowing, future maintenance, retirement plans and what the equity could achieve elsewhere. Selling one poorly performing property may strengthen the remaining portfolio. For others, retaining good homes with reliable tenants still makes commercial sense. Sitting tight should be a conscious decision, supported by the numbers. Equally, selling should form part of a plan that accounts for costs, tax and what happens next. Our role is to give landlords evidence to help them make those decisions. Policymakers should ask what would give them confidence to keep providing rental homes.

No surprise that UK landlords have been heading for the exit in the last two years after all the tax and regulatory increases. Section 24 has gutted margins for higher-rate taxpayers, while the Renters’ Rights Act and looming EPC standards have turned a passive investment into a full-time, high-risk business. Those who have held fire, waiting for better market conditions, for tenancies to end so they can sell with vacant possession, and weighing Capital Gains Tax against a volatile rate environment. Those who do sell are increasingly “flying to let” with Dubai, southern Europe, the US Sun Belt and Central and Eastern Europe popular choices as landlords chase lower entry prices and better net yields. But it isn’t free money. Currency exposure bites on every repatriation and every rent payment, UK residents still owe tax on worldwide income, and everything hinges on getting the right local partners.

There is a big difference between a landlord saying they may sell within the next three years and actually putting a property on the market today. Many will be waiting for a tenancy to end, a fixed mortgage to expire, a better selling market or simply more clarity over tax and regulation before making that decision.

That is why I would be careful about interpreting surveys like this as evidence of an imminent landlord exodus. Recent lending figures actually showed remortgaging increasing, which suggests plenty of landlords are refinancing and staying invested for now. Sentiment is clearly under pressure, but intentions can change significantly when the numbers change.

I suspect those Landlords who say they are pulling out are not seriously considering it now. Income is increasing, tenants are staying in situ for longer, and a slow market risks longer void periods while properties are up for sale.
Frustration with policy is the driver for the current sentiment, but realistically I think the serious sellers have already acted

Landlords aren't necessarily waiting for a better market. Many are waiting for a financially sensible exit. Selling a tenanted property can limit the pool of buyers, while waiting for a tenancy to end, a mortgage deal to expire or a better sale price can materially change the numbers.

But the bigger question is why so many landlords want out in the first place.

We've created an environment where landlords face increasing taxation, regulation, compliance costs and uncertainty, then act surprised when they reconsider investing.

The irony is that tenants, the very people we're supposedly protecting, could ultimately pay the price.

When a rental property is sold to an owner-occupier, that's potentially one fewer home available to rent.

We cannot keep making private renting less attractive to investors while expecting rental supply to remain unaffected.

Landlords need certainty, tenants need security, and government policy must recognise that the two aren't mutually exclusive.

If you want to sell, waiting needs a reason and a deadline. A tenant leaving on an agreed date gives you something to plan around; a better market or a quieter moment doesn't come with a date. In Property118's survey, landlords selling cited the difficulty of removing tenants who don't pay or cause damage, along with licensing and enforcement, though that's a self-selecting readership rather than all landlords. Before you decide, compare the rent left after costs and tax with the cash a sale would leave you. If you own the property personally and owe capital gains tax, you normally have to report and pay within 60 days of completion, so selling in a new tax year doesn't buy you another year to pay. Plan for the cash you'll keep and the date you'll need it.

A landlord’s exit plan needs to start before their mortgage deal ends, not when the estate agent’s board goes up.

Some may be waiting for early repayment charges to reduce, a tenant’s plans to become clearer or a sale price that makes the figures work. That can be sensible planning rather than indecision.

But a delayed sale raises another question: how will the property be financed while it remains on the market? I would want that considered before committing to another mortgage deal.

My view is that the desire to sell can reflect fatigue as much as profitability. A property may still make money while demanding more time, responsibility and worry than its owner wants.

For portfolio landlords, the answer could be selling the weakest property and retaining the stronger ones. Each property deserves its own review; frustration with one should not decide the future of the whole portfolio.

We're seeing increasing numbers of older buy-to-let landlords deciding they've had enough.

Higher interest rates, increased regulation, disappointing house price growth and worsening tax treatment have all contributed. But for many, the biggest factor is simply the hassle.

They've spent decades building up property portfolios and now want to enjoy their retirement, travel and spend time with their families. That's difficult when you're on holiday and a tenant rings because the toilet has broken.

We're increasingly helping clients move away from buy-to-let into more traditional investment portfolios and, where appropriate, discounted gift trusts as inheritance tax is another factor.

However, the potential capital gains tax bill on selling properties can be substantial, particularly for landlords who've owned them for decades. This can be a significant barrier to selling, even when they've decided they want out.

I’m not surprised landlords are considering selling. For many, being a landlord has gone from a sensible investment to an expensive headache. Higher mortgage costs, increased taxes and more regulation have left some wondering whether the rental income is worth the hassle. The Government wants more homes for tenants, but risks driving away the very people providing them! So why aren’t landlords selling immediately? Some are waiting for tenants to leave, others for better property prices or their mortgage deals to end. And some are simply worried about selling in today’s market. But let’s be clear, 65% saying they might sell doesn’t mean 65% actually will. My concern is what happens to tenants if rental homes disappear from the market. You can’t keep squeezing landlords and expect the rental market to come up smelling of roses. Eventually, someone’s going to get pricked, and it’ll often be the tenants paying the price.

Landlords who say they’re selling aren’t waiting for a better market; they’re waiting for their keys back. An empty home sells to anyone; a tenanted one only sells to another landlord, at a discount. So the sales sign goes up the day the tenant hands in notice, and since the Renters’ Rights Act made ending a tenancy yourself slower, that day is largely out of the landlord’s hands. As for why so many want out, successive Governments turned buy-to-let into a part-time compliance job with a full-time tax bill. Expect a slow trickle of rental homes rather than a flood, arriving in waves as tenancies end.