You write that "This is not to suggest, I hasten to add, that landlords are not selling – it is simply to say that the data is patchy."
The data is not at all patchy. This is what the RTB said in mid-2021:
"Since the RTB was established in 2004, the number of private tenancies registered with the RTB increased steadily from 83,983 to a total of 319,822 active tenancies at the end of 2016. In recent years there has been a reversal of this trend, with the number falling to 297,837 by the end of 2020."
Multiple reasons for landlords to sell right now including: 1) most are out of negative equity; 2) can take advantage of the CGT exemption for holding for seven years; 3) in ability to achieve market rent due to RPZ restrictions.
As you correctly point out the mortgage-financed flow of new landlords since 2014 has been very small and is clearly not compensating for the landlords who are leaving.
In any case landlords will always sell for all sorts of reasons. This can never be prevented. What is needed is to ensure that enough new landlords arrive to ensure stability in supply. Right now there is very little incentive for new landlords to enter. BTL finance is very expensive, they could be locked below market rents in perpetuity, and for most of them rental profits are taxed at >50%, and capital gains at 33%.
Thanks for your comment. You are right to point out the importance of the RTB data. If I remember correctly, the RTB only tells us the total change in the number of registered tenancies. So we don't know how many tenancies have left the sector and how many new tenancies have been created, only the total number of registered tenancies at a given moment. Moreover, as we have seen from the Robert Troy and the Stephen Donnelly stories, not all tenancies are registered with the RTB. In particular, longer tenancies may not get re-registered and therefore as average tenancies lengths get longer we might expect an increase in the number of tenancies which are not captured.
The RTB are moving to a new system at the moment which may provide more fine grained data.
The reasons you mention for landlords leaving are all certainly very relevant and no doubt it is some combination of these that is driving the exit.
You write that "This is not to suggest, I hasten to add, that landlords are not selling – it is simply to say that the data is patchy."
The data is not at all patchy. This is what the RTB said in mid-2021:
"Since the RTB was established in 2004, the number of private tenancies registered with the RTB increased steadily from 83,983 to a total of 319,822 active tenancies at the end of 2016. In recent years there has been a reversal of this trend, with the number falling to 297,837 by the end of 2020."
Multiple reasons for landlords to sell right now including: 1) most are out of negative equity; 2) can take advantage of the CGT exemption for holding for seven years; 3) in ability to achieve market rent due to RPZ restrictions.
As you correctly point out the mortgage-financed flow of new landlords since 2014 has been very small and is clearly not compensating for the landlords who are leaving.
In any case landlords will always sell for all sorts of reasons. This can never be prevented. What is needed is to ensure that enough new landlords arrive to ensure stability in supply. Right now there is very little incentive for new landlords to enter. BTL finance is very expensive, they could be locked below market rents in perpetuity, and for most of them rental profits are taxed at >50%, and capital gains at 33%.
Thanks for your comment. You are right to point out the importance of the RTB data. If I remember correctly, the RTB only tells us the total change in the number of registered tenancies. So we don't know how many tenancies have left the sector and how many new tenancies have been created, only the total number of registered tenancies at a given moment. Moreover, as we have seen from the Robert Troy and the Stephen Donnelly stories, not all tenancies are registered with the RTB. In particular, longer tenancies may not get re-registered and therefore as average tenancies lengths get longer we might expect an increase in the number of tenancies which are not captured.
The RTB are moving to a new system at the moment which may provide more fine grained data.
The reasons you mention for landlords leaving are all certainly very relevant and no doubt it is some combination of these that is driving the exit.
Correct. Also change to registration requirement to a one year rather than figure year cycle.
Also the issue seems to be not so much existing landlords reducing their portfolio as fewer new landlords and properties coming into the PRS.