Research carried out by The National Landlords Association’s (NLA) last year (Q3 2017 with 856 respondents) finds that around 20% of its members (in the main small-scale landlords) are planning to sell at least some of their buy-to-lets.
This would be the highest level of divestment since the “credit crunch” 10 years ago.
Landlords are blaming recent tax changes introduced two years ago, but only now taking effect. This all comes at a time when there is a severe shortage of rental properties in many locations, and is likely to increase rent levels as supply diminishes.
Small-scale private landlords have been responsible for massively growing the supply of much needed rental accommodation over recent years, as demand from tenants increased. Much of it has been financed by the buy-to-let mortgage, and a section rents for low income tenants is funded by welfare payments.
Two factors have intervened: public opprobrium about the perception that landlords were growing rich at public expense, and also buying up properties preventing young people getting on the housing ladder.
The amount of buy-to-let finance provided by the banks was beginning to worry the Bank of England, but these other factors made it politically expedient for Chancellors to continue their attack on private landlords.
Imposing a penalising tax regime on higher earners with buy-to-let property, as well as introducing a whole raft of new regulations, designed ostensibly to tackle rogue landlords, but impacting heavily on responsible landlords, is making many think twice about letting property – more hassle for less return.
The NLA has produced, in association with economics consultancy Capital Economics, a series of videos giving an overview of how the PRS will look as the government’s policies come into effect.
One gives a comparison of how the tax bills affect four different people all earning £50,000 through various means. This shows that landlords will be paying far more tax than those earning only a wage or salary, a regime designed to penalise them.
“Another video ‘What does this mean for landlords?’ looks at the PRS market from a landlord’s perspective and how landlords could respond to the changes. The final video, ‘What does this mean for households?’ shows how tenants may end up paying higher rents and have fewer rental properties to choose from.”
Richard Lambert, CEO of the National Landlords Association, said:
“The videos were created to explain simply some quite complex policies, for both landlords and their tenants. They, along with our own research, show that the Government needs to look at the impact these policies will have on the PRS.
“More and more people are relying on this sector for a home, so it is vital that landlords not only provide a high standard of accommodation, but are incentivised to do so by the prospects of a reasonable return on investment.
“It is our view that these policies are undermining the viability of many landlords’ businesses and removing the incentives to invest in residential property for business purposes.”
The videos are available to view at taxinghomes.co.uk
These four videos contain research, conducted by Capital Economics for the NLA, which shows that landlords and tenants will pay more than their fair share in tax as a result of changes made by the Government to curb buy-to-let activity in the private rented sector (PRS).
The NLA says:
We seek a fair legal and regulatory environment for landlord and tenant, and actively lobby the government at all levels on behalf of our members. We also help ensure that our members are aware of their statutory rights and responsibilities.
We support over 65,000 Members and Associates, ranging from full-time landlords with large property portfolios to those with houses-of-multiple-occupancy or with single bedroom flats.
Our network of regional representatives and branches provide an important link with local authorities and our members.