MARCH 20, 2018 | BY A & S Property
Landlords continue to quit the Scottish rental market
An increasing number of buy-to-let landlords are likely to exit Scotland’s private rented sector or reduce the size of their property portfolio in the coming months due to tax changes coming into play.
A new report by letting agent Aberdein Considine warns that the housing market north of the border is being weakened by Scottish government tax changes aimed at landlords, as well as Westminster’s move towards the phasing out of tax relief on mortgage payments.
The report claims the double hit has already led to a fall in the number of buy-to-let landlords in the market, which has weakened demand for homes to buy in some parts of Scotland, as reflected by the firm’s quarterly Property Monitor report.
The report, considered by some to be the most detailed analysis of Scotland’s housing market, reveals that property sales fell in 17 of Scotland’s 32 local authority areas during the final quarter of last year.
Since April 2016, investors who already own property have had to pay a 3% Additional Dwelling Supplement (ADS) on top of the Land and Buildings Transaction Tax (LBTT) due on their purchase, while the phasing out of mortgage interest relief is now well under way.
It has also become tougher for buy-to-let landlords to secure a buy-to-let mortgage due to more stringent underwriting rules for portfolio landlords.
“What started as a trickle of landlords leaving the sector in 2017 has now become a steady flow,” said Jacqueline Law, managing partner at Aberdein Considine.
With more landlords opting to reduce the size of their portfolios, Aberdein Considine predicts that there will be a sharp decline in rental stock coming on to the market, placing greater pressure on the private rented sector, which will push rents higher.
Law added: “There has been a significant change in the Scottish property market in the last six months and it is gathering pace.
“By targeting landlords, politicians north and south of the border are squeezing one of the biggest and most powerful buying forces out of the Scottish property market, which is already affecting sales in certain areas.”
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