Landlords who sold off properties from the private rented sector during the COVID-19 pandemic are often not returning to the market amid new, purse-tightening pressures.

“Landlords who were left hit by the pandemic are now facing a cost-of-living crisis,” according to Rachel Springall, finance expert at Moneyfacts. “The appetite for the buy-to-let market has changed over the years, and even if landlords decide to raise rents, their margins have still been squeezed due to tax changes and rising interest rates.”

Tax relief on mortgage interest was scrapped a couple of years ago and Springall added that the new tax-credit is less generous than the old system which has gradually been faded out since 2017.

“First-time landlords may be tempted to invest, but the costs of managing a property or concerns about a volatile property market could deter some from investing in this arena,” Springall said.

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Holiday lets, for example, have been popular in recent years, but Springall said it remains to be seen whether the appetite for UK breaks lessens this year. Still, opportunities in this area remain.

“Those who may have saved some additional disposable income during the UK lockdown, or were looking for alternative investment opportunities, may be keen to get involved,” she said.

There are many important decisions to be made when considering whether to enter the market or to buy further properties, which is why Springall emphasised the importance of advice and education.

Springall said that undertaking thorough research into popular locations, weighing up tax benefits, reading up on rules regarding residency periods and other potential expenses outside of utility bills can feel daunting, so seeking advice before entering an arrangement is wise.

Impact on consumers

“Aspiring property owners will know that affordable housing is very much in short supply right now, and this is unlikely to be rectified anytime soon,” Springall noted.

She explained that the fact some landlords have sold their rental property could be promising news for consumers, but she believes this would need to hit significant numbers to make a notable difference to supply issues.

Due to the coronavirus pandemic, many renters and homeowners alike may have felt their living space was too small to work from home, or that their needs had changed, such as the desire for outdoor space. However, buyers are often holding out longer to offer on a property, not just due to rising costs and supply, but also to keep up with ever-growing necessities.

“House prices are rising and are unlikely to slow in the short term – this means would-be buyers may find they need to wait longer to build a deposit,” she said.

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“Due to the rising cost-of-living, aspiring homeowners may find it difficult to make bigger monthly savings towards a deposit, especially if they are spending a large portion of their salary on rent.”

This, in turn, is continuing to make it harder for borrowers, especially first-time buyers, to save up and purchase a property.

Springall went on to explain that cutting down on non-essential outgoings is wise, but she believes buyers also need to be conscious of any hikes to their utility bills or the cost of commuting in the months ahead.

The Bank of England upped the base rate again yesterday, raising it to 1.25%, with further increases expected in the coming months.

“Interest rates are rising, so seeking a longer-term fixed mortgage may be a better choice for borrowers looking for peace of mind with their monthly repayments,” Springall concluded.