x
By using this website, you agree to our use of cookies to enhance your experience.
STAY CONNECTED!
    
newsletter-button

TODAY'S OTHER NEWS

Tenants face rent bombshell

Rent hikes are inevitable unless the government reverses tax changes for landlords, it has been claimed. 

Tenants face paying an average of £23 a month more in rent, totalling £414 across a typical 18-month tenancy, according to MakeUrMove.

The online letting agent forecasts that the average monthly rent, which it says currently stands at £918 a month, is set to rise by 2.5% in 2018.

Overall, the company predicts that around 2 million tenants across the UK will be hit with rent hikes totalling a combined £46m or so a month, as many landlords are forced to pass extra costs onto tenants by pushing up rents.

The government has attempted to create what the former chancellor George Osborne described as a “level playing field” between landlords and those buying homes to live in, by increasing taxes for landlords such as increasing stamp duty costs, cutting mortgage interest relief, scrapping the ‘wear and tear’ allowance, among other measures.

The impending tenant fees ban is also contributing to create a perfect storm of financial pressures on landlords, leaving many with little alternative but to increase tenants’ rents to cover their costs.

Renters in London in particular are in for a rough ride, with around half of landlords in the capital planning to increase rents.

In the North East and Scotland tenants will also be adversely affected, with 46% and 45% respectively of landlords in these areas saying they will be forced to increase rents due to recent tax and legislation changes.

Alexandra Morris, managing director of MakeUrMove, said: “Rents have already been increasing year on year, and it’s likely that 2018 will be the year that sees UK tenants feel the biggest impact yet from the recent changes introduced to the private rental sector.

“From our experience, we know many tenants are already stretching their monthly budgets to afford rental properties, and additional rent increases could be the final straw, tipping them into debt or rent arrears.”

In addition to the implications on rents, the recent study by MakeUrMove also found that 10% of landlords would definitely have to sell their property due to legislative changes, reducing the supply of much needed rental stock.

Morris added: “The value of these landlords cannot be underestimated, they are central to the UK’s rental sector and add valuable capacity to the market, and the Government needs to recognise this and start to support them, for the sake of the UK’s millions of tenants.”

  • Peter David

    Alas this not scaremongering even. It's an absolute necessity to raise rents aggressively purely to be able to collect the tax required from section 24. We as a landlords are rather shocked at the intransigence of the government in refusing to even acknowledge the problem. Namely, that by reducing allowable mortgage interest costs from profit calculation will result in artificially increased taxable profits. Just by changing the rules to twist things to make it look as though you have more profit does NOT actually mean that you HAVE more profit. Yet we are being taxed on this imaginary profit. So to collect that tax means up go the rents. I know this is obvious yet it doesn't seem to be to the government. Add to that, in our case, all our tenants don't want to face the trials of getting a mortgage. They WANT to rent. And we sure look after them well too.

  • icon

    no government either tory or labour are going to let landlords off the hook, it just amazes me how short sighted these supposedly intelligent?? people are, rents will rocket, there is no shortage of tenants out there needing homes.

    icon

    no qualifications to be an mp--and it shows

     
  • icon

    I have incorporated but apparently that’s next total sabotage of the PRS madness what they are doing

    icon

    did you not have to pay stamp duty again by incorporating and 'sell' the properties to your company?

     
    icon

    No if u are in a partnership u get SDLT incorporating relief and incorporate using BICT

     
    icon

    do you have to notify the mortgage lender if you do this?

     
    icon

    I also understand that transfer to a BICT is a disposal for CGT purposes and may result in Tax having to be paid - this is getting SOOOO complicated to be a landlord.

     
    icon

    Capital gains rolled over and lenders no because it doesn’t Breach t & c I can put you onto a barrister who will do it all for you but you need to tick several boxes to qualify mine been running for 18 months all good

     
  • Jamie Moodie

    High time our feckless politicians listened to this impending disaster of their making and reversed this idiocy now.

    icon

    they know best, they think

     
    Peter David

    If.only.

     
  • icon

    This makes for interesting reading https://www.cml.org.uk/documents/the-profile-of-uk-private-landlords/the-profile-of-uk-private-landlords-20170118.pdf

    The significant point is that the majority of UK landlords will not be immediately affected by the most publicised tax changes as they are not mortgaged.

    Add to that the fact that 65% of landlords are currently lower rate tax payers and will therefore not be affected. Whilst some of them will be tipped into the higher rate less than half of tenanted property is mortgaged anyway and over 60% of landlords own only one rental property and are therefore less likely to be nudged into the upper tax bands.

    Some landlords will be affected. They will be the ones with newer portfolios who are heavily geared, and for them this will be very painful.

    S24 is undoubtedly a disaster for some but the vast majority of landlords, and therefore tenants, will be unaffected. The landlords that are affected can try and force up rents, and we are seeing that locally to an extent with some asking £150pcm or more above market rent, but those properties are attracting voids and eventually prices are reduced. Why would a tenant even look at a property which is going to cost them £1,800 a year more? The most noticeable thing I have noticed in our area is the number of reductions in asking rents not the increases.

    icon

    the survey size on that research was not sufficient to make any major claims - only 851 BTL landlords were surveyed...

     
    John Socha

    Just to correct you:
    71% of the 2.1 million landlords only own 1 property.
    A further 14% own two properties.
    The smallest group are those who own more than 5 or more.
    These are ONS statistics.
    Your point is well made.
    The vast majority of landlords own the property outright. So removal of mortgage interest relief will make no difference.

     
  • icon

    Lower rate tax payers will be bumped into the higher rate and 65% of landlords does not mean 65% of rental stock me and my partner own 400 for example that’s just two landlords. Portfolio mortgaged landlords most likely have sizeable portfolios housing many many tenants you will not get many large portfolios mortgage free I can assure you. You in my opinion are underestimating the issue and we have already done two rent increases with another one on the way all due to s24 and we haven’t had one tenant bat am eyelid. S24 May not affect 65% of landlords but it 100% won’t be 65% of rental stock.

  • icon

    It’s all about the votes .. more tenants than landlords substantially.
    Then government is in a corner if they don’t bash landlords hard enough and propaganda this to tenants, labour promising to hit them harder to win the votes ..
    then throw the additional tax in the mix.. not much incentive for government to give landlords a break, underpinned by endless negative press churned out by BBC and press publications in their pocket.
    It will dawn on tenants at some point pretty quick this government is taxing landlords to death and they are footing a share of the bill..

  • icon

    I don't know how many people read this web site but let's say say. "Told you so x 2000!"

    I'm too old to care now so I will sell up over the next 3-4 years.

    Is there any one in government, Whitehall and local councils who has the first clue about what they are doing? Just one would be enough to impress me. Several thousand over the whole UK would be beyond belief.

    Information is beginning to come out for Grenfall Towers. It seems that not one councillor new any thing about property specifications and they all relied totally on admin staff who were similarly unqualified. That is an absolute disgrace - and that goes for all parties, not just the Tories.

    Any council and government official making decisions about property, overall, with so little knowledge needs to go away and hide out in a dungeon. They may squeal a bit about their misfortune but clever opinions, Carl Marx, trade unionists and most journalists are getting us precisely nowhere. Tenants themselves are not much more clever.

  • icon

    no--all are careerists

  • icon

    The Landlords that are mortgage free as you call them are paying 45% tax already, plus now no wear & tear + load of expensive regulations / Penalties

  • icon

    I have 5 B2L houses on mortgages and have up to now only raised rent in line with inflation every third year. I have tenants who have rented with me in one property for 8 years and the others for 4 or 5 years. I have had to warn them that in future I will have to increase rents by inflation every year which I really don't want to do as nice families living in houses with children on limited incomes. I am certain it is the kids of family who rent who will miss out as left money left for their activities and treats.

icon

Please login to comment

valpal
submit
sign up