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Landlords warn of higher rents, tenants in denial

Opinions are split about whether limiting the amount of tax relief landlords can claim on mortgage interest payments will cause private rents to increase.

Chancellor George Osborne announced in the summer budget that landlords will be restricted to claiming tax relief at the basic rate only. The measure will be phased in over four years.

The Residential Landlords Association (RLA) claims the move brings “damaging uncertainty” to the private rented sector and says landlords will increase rents.


The landlord body pointed out that HM Revenue and Customs’ impact assessment refers to the proportion of individual landlords that will receive less relief as a result of this measure. It says this misses the point that it is not the landlords but the number of properties affected that matters most.

According to HMRC 20% of landlords will be affected but many of these, if not most, will have more than one property with an interest charge against each. 

The RLA pointed to an assessment by accountancy firm PWC which has warned that the measure: “could see buy-to-let investors feeling the squeeze and putting up rents”, which, it notes, “would have a major impact” on tenants.

RLA chairman Alan Ward said: “The RLA will look in detail at the Government’s measures, but on the face of it the impact could be to push up rents as landlords have to recover their extra costs.

“With many contradicting assessments of the number of private rented properties and the number of landlords, HMRC’s impact assessment is scant on detail. The reality is that this measure will hit many more tenants than landlords.

“We urge the Government to hit the pause button on these proposals and undertake a comprehensive and open consultation to assess what its measures will mean.”

But Betsy Dillner, director of Generation Rent, claimed rents are already at the maximum tenants can stand.

"Because of the housing shortage, landlords are already charging the highest rents they can get away with, so the market won't bear any attempt to push them up any further,” she said, “Plus, only a third of landlords have a mortgage so there’ll be plenty of others who won’t be hit by the changes. However, if some landlords find they have to sell up, their tenants could be kicked out. Renters need protection from no-fault eviction, and in the meantime, councils and housing associations need to be ready to buy up homes with sitting tenants."

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  • Bill Wood

    Betsy Dillner says 'landlords are already charging the highest rents they can get away with'.

    This is wrong. I charge between 10% and 20% less than market rates, allowing me to choose the tenant that I feel will suit and look after the property. I wish Ms Dillner would stick to facts rather than make them up to suit her cause.

  • icon

    Frustrating isn't it Bill - unfortunately bending facts to suit a story seems to be the usual practice across PR/story releases. Most of what we read has an agenda, doesn't it? I don't think there is really any way around it.

  • Daniel  Green

    Hi. I am a landlord and these budget changes will affect me greatly. I have 2 (possibly 3) of my properties that are only just profitable but with these budget changes it will tip the balance so I will look to sell these this year.
    So what will the effect be? I think it will raise rents but lower house prices, certainly in london where the residential letting market is very big and house prices are high anyway.

  • Kenny Sahota

    As a landlord and someone who is in consistent contact with a range of other landlords I find these claims by Betsy Dillner completely false. Landlords aren't simply these robotic creatures forcing tenants to pay the maximum that they can, many simply want to charge a reasonable price in order to retain their tenants for the long-term.

    It will interesting to see how the Private Rented Sector reacts to these changes.

  • icon

    I would like to invite Betsy to come and speak with Landlords at our monthly meetings in Peterborough. The problem with her position is that she only ever hears from whinging tenants, which when it comes down to it is probably a relatively small percentage of the rental market. If she really feels that Landlords are charging all they can she is way off the mark, and I, like many others rarely increase rents when a tenant is in situ, especially a good tenant. I have houses that would easily fetch 20% more rent were they to be vacant today. One of them would go on the market some 40% higher if the current tenants moved on. Please come and talk to us Generation Rent, you are so far off the truth.


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