Fears are increasing that buy to let investment for landlords is becoming less attractive and may lead to a property sell-off.
The warning has been issued by the Association of Residential Letting Agents (ARLA) who say that the past 12 months have been a challenging time for many landlords.
That's because of various changes brought in by the government that will make BTL investment a less profitable undertaking for many.
This means, says ARLA, that many landlords who struggle to make money will have little alternative but to leave the sector altogether.
This in turn will mean there's less housing available for tenants.
The chief executive of Arla Propertymark, David Cox, said: “Our monthly report shows that since stamp duty reform, letting agents have seen rental stock supply decrease.
“In our survey, 44% of agents saw supply fall, while just 9% saw supply increase.”
Buy to let investments less attractive for landlords
He added that the upcoming letting agent fees ban could also make buy to let investments less attractive for landlords since agents will need to pass on the fees for landlords to pay.
Mr Cox added: “27% of landlords are expected to no longer increase their portfolio and one in five are planning to sell some of their buy to let properties.
“We are now facing a severe housing shortage and should rental stock supply fall then we'll find ourselves in the middle of a real crisis.”
The organisation says that the number of buy to let property transaction has already fallen since the stamp duty surcharge was brought in last April.
Now landlords are facing the ending of their 10% wear and tear allowance and the phasing out of landlords being able to claim mortgage tax relief on their mortgages.
Best yields for landlords revealed
Meanwhile, a report revealing where landlords can achieve the best yields for rental property says that the average gross yield is now 5.3%.
The figures from BM Solutions point to the North of England returning the best yields where rents are, on average, £513 a month but deliver yields of 7%.
Other strong performing areas include Northern Ireland where yields average 6.5% and for landlords in the North West where yields are 6.4%.
BM Solutions’ Phil Rickards, said: “Investors are still offered high returns because rental yields remain strong.
“Buy to let investors, typically in northern areas, enjoy lower property prices which provide high yields, whereas regions in the south have lower yields because of higher housing costs.”
