Decade-high level of property for sale due to "a purge of cowboy landlords and plastic millionaire homeowners"
“WE are witnessing a purge of cowboy landlords and plastic millionaire homeowners as the reality of current mortgage rates bites”, one mortgage broker has said as the latest Rightmove House Price Index published this morning showed the level of properties for sale is at a decade-high.
According to Colleen Babcock, property expert at Rightmove: “We’re experiencing a decade-high level of property choice for buyers, which means that sellers who are serious about selling have had to acknowledge their limited pricing power and moderate their price expectations.”
Brokers and property experts said the volume of homes on the market is a result of the mass exodus of amateur landlords, ongoing debt issues among households and borrowers coming off ultra-low 5-year fixed rates facing a “reality check”.
Mike Staton, Director at Mansfield-based Staton Mortgages, said there are multiple reasons that we are seeing many homes on the market: "Firstly, the Instagram Generation that want to live a champagne lifestyle on a lemonade budget are seeing their 1.4% 5-year fixed rate end and cannot afford the new 4% rate they are now being offered.
"We are witnessing a purge of cowboy landlords and plastic millionaire homeowners as the reality of current mortgage rates bites.
"We also have a buy-to-let problem where landlords used the profit they made as a regular income rather than using these properties as a long-term investment strategy.
“Many properties are now on the market due to a lack of understanding of the property market and a naive belief that the low pandemic rates we once witnessed would stay around forever.”
It's a sentiment echoed by Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk: “Landlords leaving the sector at scale is definitely one contributor to the number of homes for sale.
"But equally, a lot of people coming to the end of their ultra-low 5-year fixed rates are having a reality check when they look at their new mortgage payments and are preferring to downsize.”
Patricia McGirr, Founder at Burnley-based Repossession Rescue Network, said financial distress is a factor: "As insolvency figures and personal debt continue to rise, it’s hard to deny a correlation between the level of homes on the market and financial distress. For some sellers, this is without doubt a case of jumping before they're pushed."
Michelle Lawson, Director at Fareham-based Lawson Financial, said: “Landlords are considering their position with the upcoming Renters Rights Bill rapidly progressing, with many trying to get out while they can.”
Harry Goodliffe, Director at HTG Mortgages, agreed: “There’s definitely a sense of ‘sell now before it’s too late’ creeping in. Many landlords are leaving the market after years of rising costs, tighter regulations and higher interest rates eating into margins.”
Ross Lacey, Director & Independent Financial Adviser at Rayleigh-based Fairview Financial Management, also said tighter regulation is turning the screws on landlords and causing them to exit the sector: “We're seeing some landlords with less than five properties look to exit the sector given the squeeze on profits over the past few years, and tighter incoming regulation which puts landlords in a potentially vulnerable position to problem tenants."
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, added: "Supply has surged due to multiple factors: landlords exiting the market amid tougher regulations and tax changes, sellers rushing ahead of November's Budget, and vendors reactivating postponed plans from last year's election period.
“The primary driver of the current glut, however, has been amateur landlords liquidating holdings in response to regulatory pressures and tax changes. Meanwhile, the data suggests underlying household financial strain is also a factor.”
