Call for Government to make buy-to-let more attractive
The latest forecasts from the Office for National Statistics predict that the UK population is set to increase from 65.6 million in 2016 to 74 million by 2039, adding further pressure to a housing market already failing to meet existing demands.
Amid the estimates of significant further growth in the UK population, there have been ongoing calls for the Government to rethink making buy-to-let a more attractive proposition for investors.
The consequence of a larger UK population is likely to be ongoing overall increases in property values, which keep pricing younger people out of the housing market. Consequently, extra strain would inevitably fall on alternative housing solutions, including the private rental sector.
In this climate, the housing industry is calling for the Government to reverse a number of recent legislative initiatives, which have acted as a disincentive to buy-to-let landlords. These include the end to the ‘wear and tear’ allowance, the phasing out of mortgage interest relief and the addition of the 3% stamp duty surcharge.
Recent data from the National Landlords Association indicated that rental income remains steady, with seven out of the twelve regions of the UK returning rental income yields in excess of 6%.
This positive sign should serve as encouragement to would-be buy-to-let landlords, however recent Government actions have created a disheartening mood for many, thanks to stamp duty reforms and tax hikes.
Andrew Turner, chief executive at Commercial Trust, said:
There is no doubt that the nature and volume of legislation change has hit landlords hard financially and has also had an off-putting effect for many.
Any reversal of the recent legislation would offer buy-to-let a much-needed shot in the arm and would help to encourage more people to enter a market which is clearly a fundamental requirement to help house our growing population over the coming decades.
However, whether the Government back-tracks or not, every business must adapt to change to thrive. In my experience, landlords do this better than most. We are working with landlords daily to identify solutions that will set them up for financial success now, and in the future. Buy-to-let remains a robust investment opportunity.
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.