Will Labour’s CGT and reform plans crash the lettings market?
The Guild of Property Professionals has asked their member agents how landlords were responding to all the current changes. Here's some of their replies.
Chancellor Rachel Reeves has been warned that her rumoured hike in Capital Gains Tax (CGT) is already unsettling landlords alongside the Government’s looming renting reforms, according to member agents surveyed by The Guild of Property Professionals.
Edward Chelton Brown, Managing Director of Chelton Brown in Northampton, says: “We are seeing smaller, often accidental landlords selling their properties.”
Brown adds that: “Larger portfolio landlords, with more financial resilience, appear to be taking a cautious approach, choosing to wait for greater clarity on the Government’s tax plans before making any major decisions”.
Lisa Hunt, Residential Director of Maguire Jackson in Birmingham says: “While landlords are commenting on the Renters’ Rights Bill, we have yet to see this having any significant impact on demand or indeed supply.”
She adds that: “The evidence is that the increased supply of stock for sale is being absorbed by an increase in first-time buyers encouraged by falling interest rates”.
But Anita Lovell, owner of Results Estate Agents in Rothwell, reports dwindling supply and rising rents, pointing out: “With fewer properties available, landlords can charge premium rates”.
Landlords may become less willing to accept short-term lets.”
She also says that the abolition of Section 21 notices means: “Landlords may become less willing to accept short-term lets, fearing difficulties in evicting non-paying tenants, as the court system remains under pressure”.
Don’t panic
Darren Moore, Head of Lettings at Bentons in the East Midlands urges landlords not to panic: “The private rental sector will continue to evolve, and knowledgeable letting agents can guide landlords through these changes”.
There are wide regional variations. Moore adds: “In the East Midlands, portfolio landlords remain optimistic, with rising rents and strong demand countering any immediate concerns”.
He warns however that the lack of new buy-to-let investment could worsen the supply-demand imbalance in certain areas, leading to higher rents.
In contrast, say the Guild, regions like Birmingham and London are already experiencing a landlord sell-off, although new Build to Rent developments may help offset this in city centres.
Landlords have always bought and sold we always plan for losing properties due to landlords selling in any one year. The difference now is there are fewer small landlords entering the market to replace all of those leaving. The inevitable trend is a smaller number of rentals in the PRS which in this area has rarely suffered from over supply at any time so rents are rising as more people chase fewer properties.
I have to say that the topic which recently has caused more concern with the people I speak with is the EPC debacle now that is really causing concern with rural properties.