Landlords are facing increased pressures as the Stamp Duty surcharge on second homes and buy-to-let (BTL) properties rises from 3% to 5% today, 1st April.
Property lender Together revealed that among the 11% of landlords planning to exit the market, 13% cited Stamp Duty hikes as a key reason.
Research found that 15% see the surcharge as the biggest challenge to property investment this year.
Many landlords are lobbying for a reduction or reform of Stamp Duty to prevent a loss of rental stock.
The Labour Government’s Budget announcement last October confirmed the hike, despite ruling out increases to Income Tax and National Insurance in the Spring Statement.
The costs of upgrading rental homes for energy performance and implementing the Renters’ Rights Bill are additional challenges.
Two-thirds of landlords support the energy efficiency measures, although a quarter seek tax relief for these upgrades.
There is also significant support for the Renters’ Rights Bill, with 62% viewing it positively for the BTL sector.
Ryan Etchells, CCO at Together, said: “Higher Stamp Duty may trigger some individual, private landlords to carefully consider how these costs will impact their property plans.
“The Government must consider the knock-on effect this will have on providing good quality rental stock which is a vital component of the housing market.
“With affordability for first time buyers becoming ever more out of reach a growing number of the population rely on rental properties.”
Etchells added: “Constant attacks on the sector will only force landlords out of the market, reducing the number of properties available and forcing rent upwards, further impacting the ability to save for a deposit.
“As expected, nearly a quarter of landlords told us that the Labour Government should prioritise “reducing or reforming” stamp duty on additional properties in order for the sector to be financially viable.
“That said, we have seen many amateur landlords decide to cut their losses and leave the market entirely, whilst many more are pivoting to the current climate.”
He said: “For example, we have seen many professional landlords looking to diversify their portfolios to spread the risk across residential classes as well as commercial sites.
“They are now turning to student accommodation, social housing holiday lets and mixed-use units to broaden income streams.
“In particular, we are seeing more houses being converted to houses of multiple occupancy (HMOs), as these can sometimes offer a better yield than a single residency.”
He added: “Whilst it’s disappointing that the new Stamp Duty charges are now in place, our customers tell us that there are still plenty of opportunities out there.
“Demand for rental homes remains, and landlords who can evolve to address these challenges will surely find success.”
