It is no secret that landlords have long been dissatisfied by the government’s approach to the buy-to-let market. The ongoing imposition of rules and regulations governing the private rental sector can be overwhelming at times, and this had made landlords feel as though the current system is unfairly weighed against them.
A poll of 750 investors by Accumulate Capital in December, for instance, found that 37% of landlords were planning to sell one or more of their properties; with 61% of them blaming increased regulations and taxes. What’s more, 72% of landlords believed that the current tax and regulation measures are unfair.
The Accumulate Capital research provided much needed insight into the sentiment of landlords towards the buy-to-let market.
The Covid-19 pandemic caught many sectors off guard, including businesses involved in the property sector. However, with the rate of new cases declining and lockdown measures easing, real estate is already in a state of recovery. In July, Halifax recorded a 3.8% year-on-year increase in national house prices.
This growth may be attributed to growing buyer demand, which is slowly returning to the market as result of targeted government measures. Indeed, Chancellor Rishi Sunak understands that any attempt to revive the UK economy must include investment into bricks and mortar.
While a stamp duty holiday is now in force, it is too early to tell whether this tax relief will have the desired long-term effects. Yes, there has been a notable surge in property transactions, and this has translated into house price growth, but can this be maintained over the coming months? Only time will tell.
Undoubtedly, we should give credit when it is due. After all, the stamp duty holiday applies to property sales of up to £500,000 for all transactions. This means first-time buyers through to buy-to-let landlords and international investors stand to benefit from this relief. However, those purchasing a property for rental purposes will still be subjected to the relevant stamp duty charges.
Real estate investors are understandably hesitant at present. There is still a lot of uncertainty in the air. And if we consider how landlords were feeling before the onset of the coronavirus, the big question is whether this will compel them to leave the private rental market.
Importantly, I do not think landlords who are considering an exit will turn their backs on property investment. Bricks and mortar has proven to be a safe and secure asset able to deliver long-term capital growth.
Paul Howells is CEO of Accumulate Capital.