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why is there a shortage of buy to let properties?
Posted in
16/08/2021

Why Is There A Shortage Of Buy-to-let Properties?

Buy-to-let, for decades, has been seen as an attractive investment and this is especially true for properties in Tunbridge Wells and Tonbridge. Only a short commute to London, but with great access to the countryside and coast, it is easy to see why the demand for rental properties in Tunbridge Wells is so high.

Why buy-to-let?

Becoming a landlord certainly has its benefits. Some of the benefits of purchasing a property to rent out include earning a rental income and generating capital growth as the value of the property increases. Buy-to-let is also a secure investment as landlords can take out insurance to cover losses including rental income, legal costs and property damage.

However, the property market is currently facing a crisis of a lack of buy-to-let properties. Let’s take a look at the reasons why this is happening…

Landlords selling their properties

There is a trend of landlords beginning to sell their properties and leaving the sector. This is either due to financial difficulties or because they want to cash in on the high prices of properties at the moment. As a result of the pandemic, demand for houses is particularly high right now as buyers are looking for more space after lockdown.

Tax relief changes

Borrowing money through a buy-to-let mortgage was once seen as a tax advantage, as mortgage interest was non-taxable. However, changes to mortgage tax relief  has had an impact on the buy-to-let market. Fewer buy-to-let properties are being bought due to the significant changes which were introduced in 2020.

Landlords can no longer deduct any of their mortgage expenses from their rental income, and instead will receive a tax credit which is based on their mortgage payments. This spells bad news for landlords as it means a potential increase in their tax bill, and that they may be forced into a higher tax bracket.

Rise in homeowners selling up

This year has seen an increase of chain-free properties on the market, as homeowners are selling their current property and moving into renting. This chain-free status can be an advantage for buyers in the current highly competitive property market. This has led to a decrease in affordable rental properties, which in turn is having an impact on the number of buy-to-let properties available.

The average home in the UK costs over eight times average earnings, so despite the pressure the buy-to-let market is under, the demand for rental properties is as strong as ever. At TN Lettings, we understand the rental market in Tunbridge Wells and in particular how popular rental properties are for those relocating. We have seen a big upturn in new renters from London, Hong Kong and Ireland and with some big employers in the area, such as Tunbridge Wells Hospital, the get napped up very quickly. This could be another reason for the general shortage.

Do you need help with a buy-to-let property? TN Lettings are experts in managing property and can make the process as hassle free as possible. Contact us today for more help and information.

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