Buy-to-let landlords selling their properties

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by Kay Murchie

According to landlord.co.uk, the property website, buy-to-let landlords could spark a house price crash as a growing number are selling their properties following worries of price falls and rising interest rates.

landlord.co.uk, which has 14,000 registered landlord users, added that many are panic-selling as they are expecting a dreary winter in the property market. The findings backs a survey by the Royal Institution of Chartered Surveyors (RICS), which said that landlord sales are at their highest for 2 years in the second quarter of 2007, after increasing 44% since the start of 2007.

A spokesperson for RICS commented that the uncertainty in the market is making landlords nervous. Those with the smaller portfolios are more vulnerable.

A spokesperson for landlord.co.uk cautioned that the buy-to-let market is plunging. If the majority of landlords continue to sell, the property market could crash. Landlords have decided that market conditions are looking bleak.

Furthermore, there is an indication that landlords have been trying to increase rents to cover their higher mortgage payments. Consequently, many tenants are walking away, leaving landlords with voids.

The difficulty for many landlords is that with the enormous increases in capital values, rental yields are very low, currently at 4% and lower is now the norm in London and the south east.

According to John Charcol, the mortgage adviser, over half of landlords own 1 to 3 properties, but those with over 10 properties own 90% of the buy-to-let stock. John Charcol commented that if these with larger portfolios started selling then there would be a problem but there is no sign of that yet.