PEER-TO-PEER lending platforms involved in the housing market have played down concerns surrounding the predicted fall in the number of landlords investing in property over the next few years.
The latest Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS) suggested there may be trouble ahead for the private rented sector (PRS), with 61 per cent of respondents suggesting landlords would look to exit the market in the coming year. Just 12 per cent predicted an increase in the number of landlords.
This is unlikely to be a short term trend either; more than half predicted that there would be a net reduction in the number of landlords over the next three years, with only 17 per cent suggesting a rise.
Paul Bagust, commercial property director at RICS UK, said: “The number of landlords exiting the market due to recent policy changes is concerning, especially given house price rises. A functioning PRS is crucial to a healthy housing market and it’s predicted that over 20 per cent of all households will be PRS by 2020.”
Landlords have had to deal with a host of tax and legislative changes in recent years, including the introduction of an additional stamp duty rate for second home purchases and the restriction of tax relief on their investment properties.
Landlords are potential borrowers for many P2P property lenders, so a landlord exodus may be a concern, yet firms in this area of the market are unfazed.
John Goodall, chief executive officer and co-founder of Landbay, said that the government’s changes were designed to professionalise the buy-to-let sector, so it was no surprise that amateur landlords are electing to step away from the market, but emphasised that larger landlords are “picking up a lot of the slack”.
“Now more than ever aspiring homeowners are looking to the private rented sector to support them on their path to ownership so demand for rental properties continues to grow strongly,” he said. “At Landbay we lend almost exclusively to the experienced professional end of the market, so there’s been no real impact on loan demand from borrowers.
“In fact, as ‘dinner party landlords’ exit the market, it’s easy to see why some would choose to lend money to professional landlords through peer-to-peer lenders like ourselves, giving them alternative exposure to the buy to let market, so we may well see investment levels rise as a result.”
Meanwhile, Stuart Law, chief executive officer of Assetz Capital, said that investors continue to be hungry for housing development investment opportunities which deliver a healthy yield, and pinpointed the north as a particularly fruitful area.
“We are also seeing an increase in residential property developers gaining investment from Assetz Capital; in fact July 2017 was our record month for property lending with facilities equally four per cent of the entire volume of lending from UK banks,” said Law.
“This is funded by a substantial growth in our lenders who are perhaps moving from buy-to-let investment to P2P investment, which offers a lower capital risk profile and perhaps higher net of tax income.”