The past year has been a challenging time for landlords, following a raft of changes introduced by the government, prompting concern that it will be harder for a number of buy-to-let investors to make a profit from renting out property, leaving many with little alternative but to exit the sector, restricting the level of housing stock available for tenants to choose from, according to the Association of Letting Agents (ARLA Propertymark).
There has already been a fall in the number of buy-to-let property transactions since the introduction of the 3% stamp duty surcharge on additional properties in April last year, along with the scrapping of the 10% ‘wear and tear’ tax relief for landlords who rent out furnished homes. But ARLA Propertymark fear that the phasing out of mortgage tax relief from this week (the start of the new tax year is on Thursday) will inevitably push some landlords out of the market.
However, the trade body insists that it is not too late for the government to make what would be a shock U-turn.
David Cox, chief executive, ARLA Propertymark, commented: “It’s been a year since the government inflated Stamp Duty costs for landlords to 3%, and it’s already made the Treasury £1.3bn. That’s more than changes to mortgage interest relief, which are now in force, are expected to make in its first three years. This will only further squeeze the sector and make buy-to-let a less attractive investment for landlords.
“Our monthly Private Rented Sector report shows that since the stamp duty reforms came into effect last April, letting agents have seen the supply of rental stock decrease. In February, 44% saw supply fall as a direct result, while only 9% saw it increase.
“The impending letting agent fee ban will also make buy-to-let investment less attractive, as costs are passed on through inflated agents’ fees which landlords pay.
“A quarter [27% of landlords] are expected to stop increasing their portfolios as a result and a fifth plan to sell some of their properties.
“We’re facing a severe housing shortage at the moment, and if the supply of rental stock falls any lower relative to demand for housing, we’ll find ourselves in the midst of a real crisis.”
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