Britain’s rental sector lost 66 properties a day last year as high mortgage costs and tax changes pushed more landlords to quit.
Landlords sold 35,000 more properties than they bought across 2022, according to Hamptons analysis of data from Countrywide, one of Britain’s largest property groups.
That was the largest net loss in three years and a 17pc surge compared to 2021. Landlords accounted for 16pc of property sales last year, but only 13pc of purchases.
Investors are fleeing the rental market as climbing mortgage rates and punitive tax changes leave many struggling to make a profit.
High interest rates have brought a surge in mortgage costs, with buy-to-let rates now at 5.95pc – more than double what they were a year ago, according to Moneyfacts.
Tax changes that came into full effect in 2020 mean landlords who own properties in their own names face a double blow as they are no longer able to deduct all of their interest bills from their rental income when they calculate their profits for tax purposes.
Large, corporate build-to-rent investors have been rising to fill the gap as private landlords quit the sector. However, just 10,900 build-to-rent properties were completed last year, according to JLL property consultants.
The figures suggest that the rental sector lost 24,100 properties overall in 2022 – or 66 a day.
David Fell, of Hamptons, said landlords are likely to continue selling more properties than they buy across 2023.
“The bulk of sales will be driven by more highly leveraged landlords across London and the South East, where the numbers don’t stack up as their fixed rate deals expire,” Mr Fell said.
Emma Rosser, of JLL, said higher costs of development debt and ongoing cost inflation for building materials and labour were also hitting build-to-rent output.
“Looking ahead, new construction is quite challenging,” Ms Rosser said.
“Across all the living sectors in 2022, we’ve seen development funding deals drop with investors looking more to existing built assets,” she added. This is likely to have a knock on effect on building output going forwards.
