The Royal Institute of Chartered Surveyor’s (RICS) house price index published in August 2018 revealed that house prices in the UK roseby a factor of +4. During the same period, many landlords have exited the buy to let sector because of increased costs.
House prices rose in most areas, except London where there was a fall. The RICS figures are in line with those reported by major building societies such as Nationwide who said that house prices rose nationally by 2.5% in the months up to the end of July 2018.
The RICS noted that many landlords are selling up. They commented:
“The impact of recent and ongoing tax changes is clearly having a material impact on the buy-to-let sector as intended. The risk … is that a reduced pipeline of supply will gradually feed through into higher rents.”
The RICS predicts an increase of 2% in average rents over the next year and 15% over a five-year period. This compares with a 0.4% rent rise over the last twelve months.
Landlords selling houses results in more houses available in the market, but the number currently being sold is not having a great effect on prices.
Some large landlords with many properties have formed limited companies to save tax. Commercial property landlords have been less affected by changes to their costs.
Though trading conditions for buy to let landlords are more difficult, lenders are still launching new buy to let commercial mortgages to attract borrowers.