The number of private rented sector landlords intending to reduce the size of their portfolio is at its highest for ten years, it has been claimed, with 46,000 properties due to be taken out of the rental market.
The National Landlords Association (NLA) says 20% of its members plan to shrink the number of properties, largely because the recent tax changes for landlords and the looming tenants’ fees ban are “undermining the viability of many landlords’ businesses”.
Research firm Capital Economics were commissioned by the NLA to look into the recent tax changes, which reveal that landlords are set to lose £400m from the changes, which come into full effect in 2020.
The research also reveals that ‘moderate earner’ landlords will soon pay “significantly higher taxes” than those who earn comparable incomes through other means.
Private rented sector
The NLA’s CEO Richard Lambert (pictured, left) says the government’s recent tax assault on private landlords is clearly taking its toll and that “the Government needs to look at the impact these policies will have on the PRS”.
Landlords have recently had several tax allowances rolled back including an automatic wear and tear allowance and tax relief on mortgage interest payments, and an extra Stamp Duty of 3% levied on buy-to-let property purchases.
“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,” says Richard.
“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.”
To help landlords, the NLA has produced four videos to explain the tax and other changes in the market.
Simon Heawood, CEO and Founder of property investment website Bricklane.com, says: ““A perfect storm is brewing for landlords looking to property simply as a financial asset.
“Policy makers across the political spectrum are acknowledging that home ownership is valuable because it affords permanence and security, and not just for the financial returns which placated constituents of yesteryear.”