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Half of landlords would not currently invest in the BTL sector

A number of landlords would not currently consider investing in the buy-to-let sector as a consequence of buy-to-let tax and legislative changes, new research shows.

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.


The government is being urged to remove all stamp duty and land tax surcharges for buy-to-let landlords and reverse phased-in cuts to mortgage interest tax relief in order to reinvigorate the sector,

In a poll by Foundation Home Loans, 51% said both measures needed to be addressed in order to help build greater confidence in the sector.


Some 22% of respondents said ‘Remaining in the EU’ would give the biggest boost, while conversely 14% said securing the UK’s withdrawal from the EU would help most.

Tax and regulation changes mean that 50% of those surveyed would probably choose not to make a first investment decision now.

Jeff Knight, director of marketing at Foundation Home Loans, said: “It doesn’t seem surprising that the two biggest impacts on landlords over the past five years – stamp duty increases and cuts to mortgage interest tax relief – are seen as the biggest factors holding back the market. Clearly, such measures were always going to have a real influence and they have undoubtedly resulted in a large number of so-called amateur landlords either selling up, or not being able to go ahead and add to portfolios.

“On the flip side of this, we now have a sector which is much more in line with professional and portfolio landlords; utilising limited company vehicles to ensure they retain their tax relief, and where appropriate, adding to their portfolios via these structures. Because of this, the move towards greater levels of limited company business is likely to continue for many landlords, as I expect a u-turn is very unlikely despite fiscal loosening likely to be a strategy adopted in the very near future to stimulate a weakening economy.

“There is a continued appetite to be active in this sector and a recognition of the strong demand for quality properties from tenants. That being the case, and with a perhaps more sympathetic Government ear, we might anticipate that demand for mortgage advice and buy-to-let mortgages will continue to grow, although many are clearly worried about the current economic uncertainty and what might happen in a post-Brexit world.

“The other positive here is the long-term view taken by many landlords and the fact over four in 10 would still invest today if it was their first property. Given all the demographics and the underlying demand drivers for the private rental sector, advisers are still likely to see a steady stream of landlord clients seeking to remortgage and/or purchase, for many years to come. It continues to pay to be a specialist in this sector and Foundation is here to help advisers develop their buy-to-let propositions for the demand that is clearly still out there.”

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    Fully agree Higher Taxes = Higher Rents
    I've informed all my tenants that their rent increase is courtesy of Section 24 taxes and if Labour get in then I will probably have to sell my house their home. The irony is our tenants would naturally vote Labour

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    • 22 August 2019 16:45 PM

    Given my time again I would have bought ONE property rather than the 5 I did.
    So I would have housed no more than 4 single occupiers to avoid Mandatory HMO Licensing meaning there wouldn't have been the many tenants I have housed over the past 12 years.
    Nor would any homeowner have bought the properties I didn't.
    Many on my development had to be sold at a knockdown price to a HA as the developer couldn't source any homebuyers.
    My net returns would be about the same for 5 properties compared to one and of course S24 would have minimal effects.
    I am now intending to reduce to two properties.
    Neither of them will be BTL.
    They will be Residential properties where lodgers only will be taken.
    So no S24 etc and no tax whatsoever.


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