By using this website, you agree to our use of cookies to enhance your experience.


Tenant arrears set to soar

Tenant defaults could increase significantly over the next 12 months amid reports that many buy-to-let landlords plan to increase rents next year to offset tax hikes from April 2017, according to Upad, one of the UK’s largest online letting agents.

As many of you will know, the existing rules that permit landlords to offset all of their mortgage interest against tax will, from April 2017, be phased out, restricting the amount of mortgage interest landlords can offset against tax on their property investments.

By April 2020, once they have been withdrawn altogether, the disastrous consequences of Section 24 will mean that it is likely that higher-rate tax payers will only receive 50% of the relief that they currently get, with various experts having already warned that landlords will be left with little alternative but to pass higher costs on to tenants.


With many landlords likely to face the prospect of having their profits unjustly wiped out, the majority of landlords will have no option but to recoup their losses through higher rents, with tenants ultimately paying the price of the government’s unfair tax-grab.


The online letting agent fears that many tenants will struggle to meet inflated rent prices, with the company pointing to recent data revealing that almost 10% of all tenants in the UK fell behind with their rent payments in August 2016, and this growing problem, albeit from a low base, has forced more than 34,000 landlords to issue possession claims between July to September 2016.


Upad is now urging the government, ahead of next week’s Autumn Statement, to readdress the buy-to-let tax changes to take the pressure of both landlords and tenants’ finances.

James Davis, CEO and founder of Upad, commented: “Rent arrears are becoming the fastest-growing problem for landlords, as well as tenants across the UK, and this will no doubt be their biggest issue in 2017.

“Not only have investors had to contend with the new 3% stamp duty surcharge this year, but from April 2017, they are also facing plans to prevent landlords deducting mortgage costs from rental income and limiting tax relief on mortgage interest payments. These increased landlord costs will only make matters worse, especially for tenants who in some of the most expensive areas, such as our capital, are paying up to two thirds of their salary on rent.”

He continued: “The chancellor needs to think carefully about the damage that is likely to be done, primarily to tenants, particularly if people are relying more on the lettings market than the sales market going forward in the wake of Brexit.

“Over stretched landlords will try to recoup these additional taxes by increasing rents, but if wages struggle to increase more than inflation, landlords will struggle to secure rises, putting the entire lettings financial model at risk.”

Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.

  •  G romit

    Tenants who struggle will be forced to move to lower cost properties (either smaller or in a cheaper area).

    This going to be a massive game of musical chairs, with a significant number of Landlords selling up and less Landlords investing in more properties because of te hike in SDLT; there will be fewer chairs available, and a lot of people losing out when the music stops. The music will start again for another year until the next phase of MIR kicks in. Those least able to afford the overall higher rents i.e. those on Housing Benefits, the low paid, the disabled and pensioners will find themselves homeless.
    Savvy Landlords will vet Tenants for their ability to bear several large rent hikes to avoid changing Tenants annually; hence in many areas Landlords are already shunning Housing Benefit claimants.

    Well Done George Osborne and his support for "One Nation".

    On 23rd Nov Phillip Hammond has an opportunity to correct this massive wrong, before the damage to the PRS really kicks-in and prevent the misery to Tenants on an unprecedented scale.

  • icon

    Thank goodness we've finally got some press coverage willing to tell it how it is! The future of professional portfolio landlords and their service(s) are now in grave doubt. Hammond MUST correct this urgently or we will end up in the same position as Ireland - rents and homelessness at an all time high. Destroying an ordinary private individual landlord, and his tenants, clearly does nothing whatsoever to save the housing crisis, but it does make the rental sector considerably worse.

  • icon

    Not only homeless, rental issues, think about how many people in letting and sales agent industry will lose jobs because lack of demand. Surprised our government did not see those are coming next. Very Smart!

  • icon

    Landlords contribute c 30 billion towards the economy in 2008 . They also use many trades self employed people for repairs etc. Landlords are continuously slagged off for taking housing benefit money. Well S24 will stop them wanting HB tenants so someone else can have the unpaid rent and trashed houses and the housing benefit bill will be much greater in costs for temp and BB.
    Only a blind person cannot see what the future holds if S24 is not scrapped

  • icon

    Having watched a programme last night on landlords trying desperately to get their, repeat their property back because tenants not paying the rent.
    Why O why does it take so long to get a tenant out who is not paying to live in the property - end of story. No dispute they are living there so must pay rent, what is there to dispute? I respect the law of the land but it is just madness for a judge to give the tenant more time why ! The tenant just ends up being more and more in debt so making it an impossible amount to pay when they are finally made to leave. Where is the dispute, no rent,no stay. Do judges think we landlords are rolling in it, or are we just a charity. Like me who lost months and months of rent before if I finally got them out then a huge bill from the solicitor. When I said what about sueing for the rent lose said, lets get them out first but of course they then disappeared !
    Like many landlords I do not have a stack of houses and now retired live on my rents.
    I think the law has got to get more realistic on what is really happening and not just ignore the facts. If us small landlords decided we have had enough then the country would be in a right state, who would house all these renters, has anybody thought of that, let's hope the landlords don't go on strike ! I live in hope. Regards Anne R.


Please login to comment

MovePal MovePal MovePal
sign up