Leading letting agent’s franchisors, Martin & Co, say the coming months are about to shape the short-term future of buy-to-let and will landlords be fazed by the coming changes?
A 3pc Buy-to-Let Stamp Duty (SDLT) levy is due to start in April, and a reduction in landlord mortgage tax relief will be phased in over the next four years. Landlords perhaps wait with bated breath the March 16th budget to see if the Chancellor has any more moves against the property industry, and private landlords in particular.
However, says Martin & Co, one key demographic seems unfazed by upcoming obstacles: the landlords themselves.
They site a key survey conducted by the Council of Mortgage Lenders showed that 60pc of landlords would shrug off a raise in their mortgage repayments without even having to increase rents.
Martin & Co’s own poll of 1,500 landlords found almost identical results – 58pc of landlords told them that mortgage tax relief changes wouldn’t force them out of the buy-to-let market. Of the 58pc, 31pc of them said that they will add to their portfolio regardless of changes.
Asked about interest rate increases, 79pc said they won’t be priced out of the market, with 52pc saying they see no obstacle to them continuing to grow portfolios.
The majority of respondents to Martin & Co’s survey own 1-5 properties, the landlord demographic most targeted by government policy. Opinions were fairly evenly split across these small scale-landlords, while larger scale landlords admitted that they would stop purchasing property, or even begin to sell (7pc) more than they expected to grow their portfolio (4pc).
One of the most common conclusions landlords come to is that a serious landlord will be in the industry for the long-term, therefore they will reap the benefits of a long-term investment, namely capital gains, increasing rents, and a consistent rental income.
Ian Wilson – chief executive of Martin & Co. said in a recent presentation that the number of private rented sector (PRS) homes has increased by 135 per cent since 1985 and that the PRS could expand to 40 per cent of households in the UK. The population is likely to be split into those who rent and those who own single and multiple properties.
Currently around 71 per cent of households aged between 16 and 24 live in privately rented homes, a figure that’s up from 32 per cent in 1986. Growth has been strongest in the past 10 years with no fewer than two million new households entering the PRS across England alone, and the number of private rented properties overtaking the social housing sector in 2012 Mr Wilson said.
Pointing out some of the reasons for this growth, Ian Wilson cited net migration in each of the last two years at 300,000 people entering the UK, and for these people the private rented sector is almost their only choice. In addition to immigrants, there are now around 2.5 million students in the UK, a figure that has increased by 31 per cent since 1995.
— LandlordZONE (@LandlordZONE) March 11, 2016