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5/12/25 4:43 pm
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The way government talks about landlords, you would think they are all wealthy millionaires with money to burn. As we know, the reality is very different, and yet there is one question ministers never seem willing to answer: when you have pushed enough private landlords out of the market, where exactly do you think all those tenants are going to live? The Chancellor’s latest Budget certainly did not offer any clues, but what it did do was deliver yet another hammer-blow to the very people currently housing millions of those tenants.
Despite heavy pressure from the private rented sector, the government pushed ahead with plans to increase taxes on income from property, savings and investments. Every time landlords are hit with something else, we say the same thing because it remains true, this will shrink rental supply even further and inevitably push rents higher. That is hardly the outcome tenants will want, yet the message from government seems to be that private landlords are fair game, regardless of the knock-on effect for renters.
While the government insists this creates “fairness” between earners and investors, the reality on the ground is very different. For thousands of landlords, particularly the small, accidental and single-property owners who make up a big chunk of the market, these changes could turn a previously manageable investment into a loss-making one. Once enough of those landlords decide it is no longer worth it, those homes will disappear from the sector. My advice to all landlords now is not to operate on assumptions, only facts. This is the moment to get brutally honest about the numbers.
It is easy to see rent coming in, glance at the mortgage going out and think the property is “doing ok”. However, with rising taxes, elevated interest rates, and compliance and maintenance costs creeping up, that approach is dangerous territory. You have to understand the true financial performance of your property, or you may be unintentionally running at a loss.
Start by reviewing the value of your property and what that means for your loan-to-value ratio. If your LTV has risen because property prices have softened in your area, you may find refinancing more difficult or more expensive when your current mortgage deal ends. Interest rates may not be rising sharply anymore, but they obviously haven’t fallen back to the ultra-low levels that propped up the buy-to-let market for a decade. So, the cost of your next mortgage could well be higher than you are budgeting for, and you need to factor that into every decision you make.
Next, look closely at your real rental income, not just the monthly rent figure but the amount you are left with once everything else has been stripped away. Management fees, maintenance, insurance, compliance, licensing, service charges, and even possible void periods all eat into your margin. Add in the coming tax rise on property income, and many landlords will find their bottom line shrinking faster than they expected. The brutal truth is that if you are not accounting for every outgoing and projecting how these tax increases will impact you, you might unknowingly be operating on the thinnest of margins.
For some landlords, particularly those on higher-rate tax bands still grappling with the effects of Section 24, the numbers may simply no longer add up. If a property is only breaking even today, what happens when your mortgage rate increases at the next renewal? What happens when the revised tax rates kick in? What happens if you face an unexpected repair bill or a period of rental arrears? These are the stress-tests landlords must be running regularly. If you treat your portfolio like a business, you have to plan for the worst-case scenario, not just the current one.
The Budget was not just another financial irritation; it has to be a wake-up call for landlords to take a hard, unemotional look at their portfolios. In some cases, that may mean selling an underperforming property to strengthen the rest of the portfolio. In others, it may simply mean tightening costs, reviewing management arrangements or setting aside a more robust reserve for maintenance. Whatever your situation, do not guess or assume you “roughly know”. Be educated on your refinancing risk, how much extra tax you will pay and, most importantly, whether the property is still working for you…or not.
Many landlords feel bruised and battered by this Budget, and I completely understand why. Unfortunately, we cannot control government policy, but we can control how we respond to it. Don’t bury your head in the sand now and find yourself forced into decisions later under far worse conditions. Sharpen your pencil, open your spreadsheet and really interrogate your figures. If government won’t think seriously about where tenants will live without private landlords, then landlords at least have to think seriously about whether they can afford to stay in the game.
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