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TODAY'S OTHER NEWS

PM Johnson urged to ‘reinvigorate buy-to-let’ by introducing tax changes

Boris Johnson is being to urged to do more to support investment in the private rented sector, as research shows that a significant number of landlords are exiting the buy-to-let market.

Tax and regulation changes continue to have a negative impact on the buy-to-let market, with many landlords selling their buy-to-let properties.

Mortgage interest relief changes under Section 24, the scrapping of the ‘wear and tear’ allowance and the introduction of the 3% stamp duty surcharge have hit landlords’ profits over the past couple of years, which largely explains why so many people are exiting the buy-to-let market and thus reducing the supply of much needed private rented stock.

Many prospective tenants now face having to bid against each other, driving up rents in the process as a result of falling supply, caused primarily by the government’s draconian tax changes.

But if Johnson is able to remove all stamp duty and land tax surcharges for buy-to-let landlords, he could reinvigorate the sector – especially in areas with high-value homes where there is not a lot of movement at the moment, according to Neil Cobbold, chief operating officer of PayProp.

He said: “Although this could help the market, a pledge to cut stamp duty alone won’t be enough to counteract losses from Section 24 and bring the leveraged buyer back into the market. However, the emotional impact of some good news from a new government would have a positive impact on the sector.

“By now, the cost of Brexit has been priced into the market. We’ve already gone through enough periods of thinking we were going to leave, so the industry will be indifferent to the October deadline, adopting the attitude that either something will happen or it won’t – it’s out of their control.

“The only parts of the country that could be affected are London and other immigration hotspots, especially if the government wins its Right to Rent appeal in the High Court.”

“Something that would help the industry would be if he overturned Section 24,” he added.

However, Cobbold accepts that it is doubtful that will happen.

He continued: “As we now have such a large private rented sector, it’s too much money for the Treasury to give up. 

“If there was one the new Prime Minister could do to change the industry for the better it would be to regulate it properly. The current patchwork of piecemeal legislation burdens professional agents without any real enforcement to deter the small rogue element.

“A new government could, in consultation with the industry, replace it with well thought-out rules and regulations together with a central enforcement body. It would at a stroke help improve the consumer’s view of the industry, weed out the few lettings businesses that give the sector a bad reputation, help cut fraud, and bring about a higher level of professionalism.

“The changes we’d expect to see would be similar to what happened with financial services years ago.”

Poll: Do you think Boris Johnson has a plan to help reinvigorate the buy-to-let market?

PLACE YOUR VOTE BELOW

  • Just Mogler

    The property market at the higher end is very slow as future interest rates are at treat of increasing... If nobody moves up the ladder, the lower rungs stay put and just extend. Brexit, and the world economy, has all but frozen confidence in investment.

  • Paul Barrett

    Well I have just popped in to see a LA I have known for 10 years.
    His brand new office windows were full of available rental property.
    So there appears to be no shortage of it yet.
    I maintain that there are still too many rental properties chasing insufficient demand.
    We need far more LL selling up before tenants are in a position to have to bid against eachother for allegedly scarce rental property.
    I simply don't believe there is any shortage yet of rental property.
    There are many issues which will continue to drive down tenant demand.
    So I maintain far more rental properties need to be sold before there is anywhere near a shortage.
    I think perhaps that the demand may be there but tenants can't afford the rents.
    I guarantee that if the rents were reduced to LHA levels then every property would be gone in a shot.
    Perhaps with HB restrictions being lifted soon by Govt we might see very brave LL letting to them!!

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    Very much area driven just put a house on open rent in Liverpool 28 enquires in 24 hours had to shut the ad down same in one on Manchester 8 calls within 2 hours of listing. Up north there is a shortage deffo

     
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    I'll lend you our SNP lot. They'll soon chase away many landlords and let you have a sellers' market. BTW the deal is that you keep them. It's a gift, not a loan!

     
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    Depends on area Paul, I put a 2 bed bungalow in a Norfolk village to rent Thursday, showed 2 ladies around Saturday, now gone let agreed today. £675 month.

     
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    I think Neil is right the regulations has impacted on Private Renting sector unfairly and he mentioned 3, Wear & Tear, Stamp Duty 3% surcharge and section 24.
    We cannot loose sight of all the other things they did to damage us and drive costs through the roof. "How to Rent" guide by Shelter adding costs, more free LL's labour and changed 9 times in just 5 years, scrapping booklets, reprinting again & again, dozens of booklets for me alone. Deposits taken away in 2007 & replaced with a dysfunctional Scheme which means I don't have Deposits anymore for years costing me Thousands of £ and damaging my property, the scheme now only exists to protect the Deposit itself & nothing protecting the property. Section 21 undermined by several excuses a by product of De-Regulation Act by Shelter to prevent LL using S.21, and gunning for for whats left of it. Criminalisation of LL's previous a civil matter. Licensing Schemes expensive whether Mandatory, Selective or Additional, I had them all that don't apply to Family's in the private rented sector usually on benefit as I never had a family to me who were paying for themselves & it wouldn't apply to Council Tenants anyway. General Data Protection Regulations. "Right to Rent" / IC0 making us liable for immigration checks adding costs & time, I know we are the only ones that do everything for free. Fee ban which is wrong if someone provides a service they are entitled to make a charge, of course they didn't have to use the service, so they have put the livelihood of thousands of young people at risk who are just starting off in employment. More huge costs coming Digital Accounts which I am not capable of doing as well as thousands of others so we have to pay others to do it but for me to build a House is no barrier. Plenty more but i'll just add Neil's 3 to the list, Section 24 investment interest relief removal, Our 10% wear & Tear allowance that was there as long as letting it self, Stamp Duty Land Tax 3% surge on second properties. Help to buy Disaster helping many people that need help and making existing Property unsalable especially existing Flats you don't need me to tell you why. Are you still wondering what happened to Private Sector Housing ???.

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    If the buy to let landlords are forced to sell surely it would be either to another landlord who in turn would rent it out or to a existing renter which would reduce the numbers of renters

    Paul Barrett

    If an existing renter was to buy a property being sold by s LL why haven't they done so already!?
    Nothing is stopping tenants buy apart from the fact that most can't afford to..So the whole point of S24 is pointless!!
    There are no shortages of properties to buy.
    Why would a rental property necessarily be sold to another LL.
    It is an open free market.
    Few LL are interested in selling to other LL as a retail price is required by the seller.
    Very few LL are prepared to pay retail prices FTB can pay those!
    I'm afraid you have bought into the Govt S24 propaganda!

     
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    Exactly. This was a pure lie driven by likes of Shelter that Btl LL was stopping first time buyer from purchasing. Is it easier now? No because you realistically need a deposit. Seems to be only available as a handout or loan from relative-don’t expect them have to save for one do you. The only people that will suffer is renter that never wanted to buy

     
     G romit

    ...because some are now being used as holiday lets, AirBnB, or serviced accommodation. Some HMOs housing 6,7,8 or more now only house a single family unit.
    The EHS research shows only 2 out of 3 Landlord sales go to former tenants, so for every three sales only two reduce the number of tenants.
    With ~4,000 net Landlords exiting each month that's ~48,000+ families/people displaced, and looking for new homes in a rapidly diminishing marketplace.

     
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    No if a renter wants to buy it will be the help to buy Scheme on a new property with all those advantages.

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    If Boris had Shelter disbanded more people would have a roof over their head. Polly Neate - £120k!!!!!

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    Yes if they are so good and concerned about the Homeless instead of top brass paying themselves £120k pa, their services should be almost free for an Organisation with Charity status indeed, their Charity Status should be with drawn for the damage they have caused to Private Sector Housing & homelessness created. Home owners and landlords should think twice when making a WILL where Inheritance Tax is concerned. I was told if you give them a percentage of your Estate you get a good reduction on your Inheritance tax bill, this is collusion to my mind and no wonder they have no shortage of funds to cause trouble.

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    Michael Did you imply that you get a tax relief by giving Shelter money from a deceased estate? Please no this can’t be

     
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