A high number of landlords plan to scale back buy-to-let investments over the next 12 months, according to a new study.
One in five landlords look set to reduce the number of properties in their portfolio over the next year, the research by the National Landlords Association’s (NLA) has found.
A weakening housing market, tough new tax legislation and increased difficulty in obtaining mortgages have all made buy-to-let a less attractive investment.
Tax changes in particular appear to be driving many buy-to-let landlords out of the market, and that is why the NLA has decided to create a series of videos to assess and explain the impact of these changes on landlords and tenants.
The four videos contain research, conducted by Capital Economics for the NLA, which shows that landlords and tenants will pay more than their fair share in tax as a result of changes made by the government to curb buy-to-let activity in the private rented sector.
These include the withdrawal of mortgage interest relief for higher and additional rate tax payers, a 3% stamp duty surcharge on purchases of additional property, and the banning of upfront letting fees for tenants
The first video, ‘Taxing homes’, provides an overview of how the sector is likely to look as the policies come into effect.
The second video, ‘Hitting landlords hardest’, compares the tax bills of four different people all earning £50,000 through various means. It shows that landlords are paying far more tax than those earning only a wage or salary.
‘What does this mean for landlords?’ looks at the PRS market from a landlord’s perspective and how landlords could respond to the changes.
The final video, ‘What does this mean for households?’ shows how tenants may end up paying higher rents and have fewer rental properties to choose from.
You can watch the videos by clicking here.
Richard Lambert, CEO of the National Landlords Association, said: “The videos were created to explain simply some quite complex policies, for both landlords and their tenants. They, along with our own research, show that the Government needs to look at the impact these policies will have on the PRS.
“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.
“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.”