With less than a month to go before the new rate of stamp duty kicks in for second property purchasers, we’re seeing a flurry of completions and a surge of privately-owned lets coming on to the market.
But is the run up to the new levy masquerading a pivotal point in the lettings market?
One of the heftiest organisations – the Bank of England – has weighed in to the debate, warning of a potential buy-to-let bust looming on the back of the current boom.
I have, however, highlighted in the past how Mark Carney is the master puppeteer, with his rhetoric alone able to pull the property market into whatever shape he desires (how many times has a hinted interest rate rise never borne out?).
The Bank is warning that the surge in buy-to-let lending may have a sting in its tail.
The troubling factors are numerous, if you read widely. Research cited by the Bank suggests that 60% of buy-to-let landlords would consider selling up if rental income no longer covered mortgage costs or house prices fell 10%, triggering a mass off load and a downward spiral of house prices.
The former point is intertwined with new tax hikes imposed on landlords, which affects how they can offset mortgage interest payments and wear and tear bills, coupled with a higher rate of stamp duty imposed from 1st April 2016.
Together, these will put pressure on landlords who are just about breaking even, pushing some into running at a loss.
And now there is a new cloud on the horizon in the shape of Build to Rent. This corporate-suited institutional investment vehicle promises thousands of brand new properties for Generation Rent.
The developments will be brand new, will have shared facilities such as gyms and cinemas, will have the option of furniture packages and will be competitive when it comes to rents.
Build to Rent heralds the era of renting from a ‘brand’ instead of a person, with the volume of units involved able to absorb stamp duty bills and taxes that really hurt small-time private landlords.
Now is the time for letting agents to make the case to current and future landlords that there is a place for them in the private rental sector.
Niches need to be found, USPs need to be defined and landlords need persuading that lettings still provides a healthy return on investment.
Our population is still growing and demand for rental property still outweighs supply, so we’ve not tipped over into the negative just yet. But we need to take action now to stave off reaching that point.
* Simon Duce is managing director of the ARPM Group, which provides national outsourced lettings support