Landlords ‘at risk of going out of business’ as profits squeezed

Broking industry boss Kate Davies says the Government's focus needs to be on the BTL sector and how to raise investment in the sector.

Kate Davies, IMLA

The impact of regulatory and tax changes on landlords’ business models combined with sharp rises in buy-to-let mortgage rates risk putting more private landlords out of business, a hard-hitting report from the Intermediary Mortgage Lenders Association (IMLA) reveals.

The trade body says that on a typical buy-to-let purchase today, a higher rate taxpaying landlord faces a marginal tax rate of 240%.


Meanwhile the end of current fixed mortgage deals and substantial rate rises is putting upward pressure on rents.

Given the current imbalance between supply and demand (the Royal Institution of Chartered Surveyors April survey quotes demand at +40% and landlord instructions at -31%) IMLA says that the long-term health of the sector is not looking good.

Its latest research report, Private Rented Sector: navigating the changing landscape, says that for years landlords have been faced with a growing burden of regulatory and tax changes which have increased their operating costs.

But these additional costs have been offset by falling mortgage rates – until now.

IMLA says that the current sharp rises in buy-to-let mortgage rates risk making large numbers of private landlords’ business models uneconomic.


And while there is still no evidence of a mass exodus from the PRS, the loss of any rented properties will affect supply and almost certainly cause rents to rise in the long-term – to the detriment of tenants.

If we don’t get the balance right, the result will be higher rents.”

Kate Davies (main picture), Executive Director at IMLA, says: “The PRS serves some some 4.6 million households – the equivalent of 11 million people – and represents approximately 19% of the housing market.

“Maintaining the health of the sector is therefore essential if we are to manage the UK’s chronic housing shortage.

“The focus now needs to be on prompting increased investment in the sector and supporting landlords, whose operating costs risk  becoming unaffordable.

“If we don’t get the balance right, the result will be higher rents, and lower availability of properties – both of which are bad news for tenants and landlords.”

Mortgage rates versus rental yields graph

One Comment

  1. Sadly both this government and all opposition parties seem to be driven by idealists and when that happens common sense and consequences go out of the window. I see little joy for tenants in the next few years with a shortage of properties in the PRS and little investment in social housing. As Churchill may have said had he been around today “Never in British politics has a Tory government seen so few making so many bad decisions that have affected so many”. Too much talk and too little action sums up Westminster.

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