Lease property shortage as one-third of landlords’ planned sales: Pegasus – Mortgage Strategy
With 37% of landlords planning to reduce the number of properties in their portfolios over the next 12 months, Pegasus Insight warns that there may be a lack of rental properties.
Pegasus data shows that this is almost the percentage planned for sale in the first quarter of 2022, at 20%.
In the same time frame, people planning to expand their rental portfolio fell from 18% to 6%.
Pegasus also found that 39% of landlords said they would exit the market within the next five years, while 22% said they had no intention of selling.
Recent sales activity is currently running nearly four times the recent purchase level, with 22% of sales assets selling real estate last year and only 6% buying properties.
Landlords with higher leverage have the most active purchases of four or more (BTL) mortgages, with 11% of real estate buying real estate in the past 12 months, about triple, about triple (31%).
Only 28% of landlords are certainly staying in the private rental industry. Meanwhile, 58% of investors purchased new properties purchased from another landlord, with 67% sold to owner occupants and 31% of first-time home buyers.
This also found that 28% knew they sold to another landlord, and Pegasus said the stock available in the PRS could be significantly reduced.
Despite these results, Pegasus stresses that the rationale for PRS remains stable, with tenants in most regions having good demand, high average rental yields and stable profitability prospects.
Only seven out of 10 landlords reported strong demand for tenants in the areas they allowed.
37% of these said the current demand is “very strong”, 36% “quite strong”, 18% “average” and 3% “weak”.
The average rental yield achieved remains high and remains unchanged at 6.3%, which is 0.2% lower than the 10-year high in 2024 in the third quarter.
Mark Long Country, founder and director of Pegasus Insight: “These results suggest that a large number of disillusioned landlords are concerned about the future of the industry and further demand that the government may be put on them.”
“Our research confirms the impact of many landlords on the rights bills of renters, the impact of energy efficiency requirements and the potential taxation on capital gains taxes purchased for sale properties. This fact is particularly shocking despite the fundamental health of this market.”
“A portion of the expected sale will depend on selective pruning of large landlords, while some of the divested properties will be excited by other landlords. However, there is no doubt that the number of stocks in the PRS will decrease over the next 12 months. As supply falls, rents inevitably increase as demand falls, and will rise further.”
“The government must awaken the danger of shrinking PR and change its approach to landlords who provide homes to 19% of the UK population.”
“It’s too late for policy makers to negotiate with the industry on ways to support landlords and encourage further investment in PRS.”
