Recent findings suggest a significant trend in the UK housing market. The once-popular buy-to-let properties are increasingly finding new owners – not investors, but ordinary people looking to settle down. Let’s dive into what’s causing this change and what it might mean for you.

More Houses Becoming Homes

Research from e.surv has brought an intriguing pattern to light: a lot of the buy-to-let properties that have been sold lately aren’t being snapped up by new landlords, but by people planning to live in them. In a study involving over 500 major valuers and surveyors, an overwhelming 90% of the sold investment properties were bought by individuals wanting to make these their main homes.

But that’s not the only significant change. The survey also showed that nearly four out of five (or 79%) of the surveyors have observed fewer landlords expressing interest in purchasing new properties for rental purposes over the past year.

Why the Sudden Change?

For anyone closely following the housing market, the writing has been on the wall. Over the past few years, landlords have faced a series of hurdles, making it less appealing to hold onto or invest in buy-to-let properties.

One of the significant blows to landlords was the alteration in how mortgage income is taxed. Instead of the earlier mortgage income tax relief, landlords now get a 25% tax credit. This shift has, to some extent, diminished the allure of buy-to-let investments.

This trend of selling off buy-to-let properties has had a noticeable impact on the market. Roughly 44% of the surveyors said that there’s been a decrease in the number of available rental properties in the last year.

A Knock-On Effect on Rental Prices

With fewer properties available for rent, the laws of supply and demand come into play. When supply drops and demand stays the same or rises, prices tend to go up.

In fact, about 45% of the surveyors based in London noticed rental properties being let for even more than their original asking price.

A Plea to the Government

Rob Owens, the head of research at e.surv, emphasised the challenges currently faced by the buy-to-let market. With concerns ranging from rising mortgage rates to the recent changes in tax policy, Owens believes it’s crucial for the government to step in. He suggests measures to keep the buy-to-let market attractive to investors, ensuring it remains a feasible investment avenue.

Final Thoughts

This evolving trend in the housing market could have multiple implications. For potential homeowners, this may be an opportune moment to find a property. But for those looking to rent, the reduced supply might mean paying a bit more each month.

Only time will tell how these changes will fully unfold. But for now, as the market sees fewer landlords and more homeowners, it’s a scenario worth keeping an eye on.