Many buy-to-let landlords in the UK are looking to diversify their property portfolios, having been unable to keep up with the various changes to the UK tax system in recent years. In data from a new survey conducted by specialist lender OneSavings Bank, it is known that 51% of brokers have been contacted by landlords that are looking to change the way that they operate.
Diversifying Property Portfolios
It was also found by OneSavings Bank that 56% of landlords involved in the survey were looking to move into the house with multiple occupants sector, 14% were looking towards commercial property and 9% were interested in mixed use property, with tax changes a big common factor.
Landlords are now feeling that different property sectors are able to offer them greater returns on their investments, making them much more appealing than their current buy-to-let properties. Recent regulatory and tax changes are widely considered to be the biggest reason for this, with reforms to the Prudential Regulation Authority playing a big part in this. With stricter criteria for portfolio landlords and changes to mortgage tax relief, landlords are to lose out on profits.
Sales Director at OneSavings Banks, Adrian Moloney, said: ‘Landlords are on the hunt for greater yields, and, in the face of regulatory and tax changes, diversifying into commercial property or more complex residential options such as HMOs can offer this. With the buy to let market becoming increasingly complex, there is an opportunity for informed brokers to support landlords seeking new niches. However, these brokers must in turn be supported by specialist lenders who can offer the flexible lending needed to finance the growth of these segments of the market,’
Difficulties keeping up with Tax and Regulatory Changes
In further research conducted by The House Shop, a property marketplace, it was found that 18.2% of landlords find it completely impossible to stay up to date with the constant changes, whilst another 29.9% admitted that they find it very difficult and a further 31.2% stating that they find it quite difficult. In addition, just 3.6% of landlords find it very easy to keep up to date, whilst 5.4% find it fairly easy and 11.7% don’t find it easy or difficult. This suggests that there is a real problem within the sector, and with almost 150 individual laws and more than 400 regulations that are relevant to the private rental sector, it is no surprise as to just why landlords find it so difficult.
The research by The House Shop also found that 63.4% of respondents believe that law and legislation compliance is the most challenging element of managing rental property, with many believing that paying up to 15% of their rental income to a management company is not the answer.
The co-founder of The House Shop, Nick Marr, said: ‘It’s a really difficult environment that landlords are operating in at the moment. The Government have undertaken a range of measures to try and drive up standards in the rental industry, and while this is by no means a bad thing, it does mean that landlords have increasingly complex and wide-ranging responsibilities to deal with.’
Author Bio
Hopwood House are UK property investment specialists, with a wide range of buy-to-let, care home and student property investments.
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Daniel Peacock