A third of landlords set to increase rent
The recent tax burden imposed on buy-to-let landlords is set to impact on tenants in the coming months, with roughly a third of UK landlords set to increase rent in the next year, to help cover additional tax costs.
Research from Cover4LetProperty discovered that 32.5% of landlords intend to increase rent in the next 12 months, as the effects of extra tax liabilities and costs begin to affect their income returns.
The report suggested that many landlords are adopting a pragmatic approach, with 83% of landlords indicating that they have no plans to increase or decrease their property portfolio over the coming 12 months.
Despite having plans to increase rent, the overwhelming majority of landlords, some 93%, said they were happy with their tenants, while 6% said they are “50/50”, and just 1% were unhappy.
The pragmatism was backed up with a cautious outlook for the future, with many landlords indicating that they have concerns over “government meddling” with the private rental industry, in addition to the effects of increased tax liabilities and the impact of Brexit.
Andrew Turner, chief executive at Commercial Trust, said:
The government changes to the buy-to-let industry were meant to provide a fairer system for tenants, but appear to be backfiring, as many in the industry had predicted they would.
“The introduction of a 3% stamp duty surcharge, plus the scrapping of interest relief on mortgage payments is set to continue to have a significant effect on landlords’ legitimate rental income.
“These additional costs, plus the need to ensure each property meets Energy Performance Certificate (EPC) standards by April 2018, have added financial burden to the market.
“At the same time, demand for rental properties continues to grow, with more people for the time being priced out of taking that first step on the property ladder and therefore needing to rent. With less buying activity from buy-to-let landlords, who are now feeling the financial effects of legislative change, there will be fewer available properties to serve the rental market.
“It therefore comes as no surprise that so many landlords are now looking to increase rents and it is vital for the government to review its recent policies on housing to give the whole market some much-needed momentum.
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.