Why Do Landlords Buy And Sell Rental Property?

This year has already proven to be particularly interesting in the rental market, particularly for landlords and estate agents who specialise in buy-to-let property.

In March, the announcement of housing policies as part of the 2024 Spring Budget provoked a somewhat mixed response, with some landlords seeing opportunities in the shifting sector whilst others are planning to sell up and exit the sector.

To understand the very different responses, it is important to understand why landlords are choosing this moment to either enter the rental market or leave it entirely.

Part of the reason for leaving is inspired by opportunity; the housing market is currently relatively stable according to some House Price Indexes, but uncertainty surrounding mortgage rates and interest rates has caused some landlords already considering leaving to choose this moment to exit.

Conversely, relative stability in the rental market, with rates either increasing or remaining steady means that there are opportunities in the sector for the right landlord and the right property.

Similarly, a reduction in Capital Gains Tax (CGT), or the tax on profits when an asset increases in value was an overt incentive to sell investment properties, which includes buy-to-let and rental accommodation.

This is compounded by only limited changes to stamp duty land tax (SDLT), the additional tax paid when purchasing a property. The only change made in the budget was to abolish “multiple dwellings relief”, which only helped landlords who bought multiple properties at once.

However, rental demand is still particularly high, and with the housing market remaining relatively stable, many people who are waiting for a fall in house prices or additional support to enter the property market will continue to rent for the foreseeable future.

This means that demand has continued to be strong, and with strong demand comes the potential for higher rental rates, which ensures strong revenue for landlords.