Home » News » Associations & Bodies » Exclusive: ‘How do we support landlords in the long term?’
Housing Market

Exclusive: ‘How do we support landlords in the long term?’

ARLA president Maxine Fothergill does some straight talking for The Negotiator about the challenges facing landlords and the PRS.

Maxine Fothergill

maxine fothergill arla

The private rented sector (PRS) houses 4.4 million households across England yet the fatigued narrative of landlords being the bad guys is everywhere you look.

Landlords are undervalued and financially it’s getting harder to be one.

In many parts of the country, the private rented sector is the crutch for an overwhelmed social housing system, and we cannot afford to lose good landlords providing homes in the second largest housing tenure.

The issues have been years in the making; go back to the Summer 2015 Budget, under Section 24 of the Finance (No.2) Act 2015, the then Chancellor George Osborne announced proposals to restrict the tax relief that buy to let landlords were entitled to claim on their mortgage interest.

In 2016, the UK Government confirmed its commitment to introduce the 3% surcharge on additional property purchases. That same year the Wear and Tear Allowance was abolished and replaced, and three years later the Tenant Fees Act put another squeeze on landlords.

Fast forward to New Year’s Eve 2019 and the first reported case of a pandemic that devastated the world; lost loved ones, lost jobs, taught us all the meaning of the word ‘furlough’, and for the PRS created uncertainty, court backlogs, extended notice periods and a bitter taste in many landlords’ mouths.

Simultaneously, house prices boomed, and travel bans meant that short term lets were in high demand making two attractive options for landlords who were struggling to jump ship or sell up.

Depleted stock

Today we face depleted stock and mounting prospective tenants. Some areas of the country have seen bidding wars; properties having up to 50 applicants and going for up to 30 per cent over advertised rent.

So, what does the sector need to retain investors and attract new ones?

Firstly, the finances need to stack up and property taxes need a review. Section 24 has tapered down, and landlords can no longer offset the interest on their mortgage payments. This is ok for the larger landlords who are limited companies, but for the small landlords who make up nearly half of the PRS and mainly prop up rural and coastal areas, this can be a real stumbling block as their tax payable can outweigh income if they are highly geared.

Secondly, they need security over risk. Landlords have known that should they need their properties back due to a change in circumstance, they could action a no-fault eviction. Now a push from the UK Government to abolish section 21 would remove this safety net. Propertymark are lobbying to ensure that if Section 21 is abolished all grounds for possession, both existing and new, should be made mandatory.

And whilst the UK Government hasn’t responded to the recommendations in the RoPA Working Group report, it seems instead transfixed on bringing in additional administration in a bid to squeeze out rogue landlords, but desperately needed incentives, such as tax breaks, are starkly lacking from any conversation.

Maxine Fothergill is ARLA Propertymark President.

November 23, 2021

One comment

  1. I do wonder why, given the commentary in the article, that the NRLA take advertising income from and email out to prospective landords, companies and information encouraging them to look at holiday lets instead of long term rental. Especially as it states in the above article about the shortage of housing stock in coastal areas in particular.
    It is frustrating to say the least, when we are trying to encourage property owners to come over to long term lets from holiday letting, for this very reason. We can also show that for a typical 3 bed property, you can earn more or about the same, net, from long term lets as yo can a holiday let, despite the headline grabbing gross numbers being much higher in the holiday sector.

What's your opinion?

Please note: This is a site for professional discussion. Comments will carry your full name and company.

This site uses Akismet to reduce spam. Learn how your comment data is processed.