The Secretary of Excellence faced widespread backlash after announcing his landlord reform bill. Credit: Ian Forsythe/Getty Images Europe
Michael Gove Proposed rent reforms are already forcing landlords out of the housing market, warns the Royal Institute of Certified Surveyors (RICS) as rising mortgage rates cause a downturn in landlord lending.
Nearly two-thirds of real estate agents reported an increase in the number of landlords looking to sell property in April, according to closely monitored industry research by RICS. A similar proportion reported declining interest from UK landlords looking to buy a home.
The supply of new rental housing continued to fall across the country, with the biggest drop in the South West, the study found.
RICS has warned that Mr. Gove's tenant reform bill, which includes a flagship policy to end “no-fault” Section 21 evictions, is pushing more landlords to exit the sector as they also suffer from rising interest rates.
Jason Coombs of Cottons Chartered Surveyors in Birmingham warned that the government's rhetoric about rent reform has spooked investors. Mr Coumbes said: “Fear and lack of leadership from this government has further undermined confidence in the viability of this sector.”
1503 Net change in rental transactions
This comes after data from UK Finance showed that just 4,948 mortgages to buy to rent were disbursed in March, half the number recorded a year ago and the lowest monthly level since records began in 2013. 2019.
Remortgage of purchase-to-rental loans has also halved to a nine-year low, suggesting landlords are selling rather than refinancing when their fixed rates expire as rising mortgage costs make it unviable.
According to Moneyfacts, the average two-year rental loan rate hit 6.02% on Wednesday. That's nearly double the average quoted rate of 3.59% as of early June 2022.
Jean Jameson, director of sales for Foxtons, a London-based real estate agent, said landlords are selling because they can't afford refinance themselves when they come to the end of their fixed-rate deals.
He said: “There are a lot of landlords with large portfolios where they don't have large equity stakes. They are selling out.”
High mortgage rates are also putting pressure on homeowners. Mortgage foreclosures jumped to their highest level since early 2020, according to UK Finance.
In the first three months of the year, 1,250 households were foreclosed, up 28% from last year. However, this number was still well below 2019 levels. The data also showed the first year-on-year drop in savings in 15 years.
Eric Linders of UK Finance said: .”