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Tax experts warn government to lay off buy to let landlords

Don’t pick on landlords - that’s the message from a leading tax and advisory consultancy.

Blick Rothenberg warns that the government needs to take care to ensure that responsible buy to let landlords are not burdened with so much regulatory red tape and costs that they decide to sell up – exacerbating the shortage of decent homes to rent.

Head of property and construction at the firm, partner Heather Powell says: “Any reduction in the number of homes to rent is bad news for the UK economy as affordable accommodation is essential if employers are going to fill the 1.295 million job vacancies reported at the end of March 2022.

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“It is critical that the government ensures that the [upcoming] Renters Reform Bill, does not reduce the supply of good, safe rental properties any further.”

She continues: “Average rent in the UK has increased 10.6 per cent in the year to May 2022, whilst rent in London has increased by 15.7 per cent.

“London rents are now an average of £1,832 per month - equivalent to a salary of £27,000, and the householder needs to pay for utilities, council tax, food, and travel on top.  

“Those working in retail and the leisure and hospitality industries are really struggling to find affordable homes, and employers in these sectors are unable to recruit staff.”

Powell adds: “Agents have reported that the number of rental homes has almost halved since 2019. Research has shown that this a result of the sale of properties by ‘Buy to Let’ landlords due to the regulatory and tax changes over the last 10 years.”

The publication of the Renters Reform Bill appears to have been pushed back further - it was originally promised in 2019 - although it is still expected during this session of the parliament.  

Powell says its provisions – tough actions against rogue landlords, improving the quality and safety of rented homes and clauses to prevent unfair rent increases - are to be supported, but L she insists landlords need to be protected.  

“If ‘no fault’ Section 21 evictions are to be abolished the Act needs to ensure that Buy to Let Landlords have the right to take possession of their properties when their situation changes, with appropriate notice to tenants” she suggests.

Powell concludes: “Renters need rights to ensure Rogue Landlords are required to provide safe, secure homes but it is critical the responsible landlords are not driven away from the sector, the homes they provide are an essential element of the country’s infrastructure”.

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    A voice of common sense amongst the baying for LLs blood - but will anyone listen? Probably not!

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    The small time buy to let market has possibly seen its best days. One person extended on debt with 5 buy to let properties cannot match the service offered by bigger players. This is not about anyone baying after anyone else's blood. It is about customer service and value for money.

     
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    I would say the bigger guys can't match the service given by the smaller landlords.

     
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    Where are average Rents £1’832.00 pm and for how many people sharing, do I divide £1’832. X 5 or 6 persons to find out how much each are paying. Certainly no individual paying that even 2 wanting a place on their own probably £1’000, pm. Does anyone know the difference between average and extreme's.

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    Average rents are per property unit. It would include a room in a shared house, right up to an entire mansion.
    If you look at the LHA rates for London you will see the 3 bedroom rate is just over £1900 per month in East London (more elsewhere). The LHA for a room in a shared house is over £589 per person per month. I don't know how close to market rent the LHA is in London. Where I operate market rent is around 20% to 40% higher than LHA.

     
  • Philip Drake

    Government should be made aware that the regulatory and increased landlord taxes ultimately are passed on to the tenant.

    Responsible landlords have compassion for good tenants and so tend not to increase rents. The consequence is that these landlords cannot afford to absorb the increase costs any longer and have to sell.
    As compassionate, responsible landlords leave the private rental sector, the private rental sector becomes less compassionate and responsible. It’s simple cause and effect and probably the opposite of what government and Shelter wish for.

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    It's exactly what Shelter wish for.

     
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    And it is exactly what Shelter are getting or more precisely what the tenants are getting.

     
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    There's being compassionate then there's being taken for a fool, there's a very fine line between the two, fools don't remain in business very long

     
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    I agree with Tricia, a voice of common sense. Since the Government started their attack on the private rental sector in 2016. Section 24 taxes. And allowing Councils to manipulate the Selective Licence regulations. to fill their coffers. The result has been higher rents and nowhere to rent if you can afford it.
    The Private Rental Sector has successfully housed millions of people since it was reformed in the 1980`s . without any major problems. Plenty of affordable houses to rent and free movement of tenants . Not So Now.


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    Im not sure where you have been, their hasnt been steady affordable private rentals for a good 15 years, nearly everyone I know has been booted out as the owner wants to move back in or selling, millions might have been cages for decades but millions have also been uprooted every few years

     
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    Nearly everyone you don't know has enjoyed long term rental at affordable cost.

    Perhaps you're just not a good tenant?

     
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    Jo. none of my natural 3 bed room house’s as originally built are paying £1900. but are significantly less looks like they are 20% below LHA. (+ they have extra spare room or 2 reception rooms)

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    Yes, commonsense finally but is anyone actually listening? I'm down to one rental, from 3 to 4 in the past. Tenants defaulting on the rent and the cost of refurbishment when they move out has made buy to let non viable for me.
    I put my one remaining rental with a lettings agent, it was month 5 before I started to earn anything after the refurbishment. Now the tenants are leaving after 6 months and haven't paid the final month's rent, so that will have to come from the deposit. So, if they've left the place in a mess .... These problems have only started in the past couple of years, previously I've had good long term tenants. Is it all the negative press that landlords receive and the awareness that actually if they default on rent there's realistically little that the landlord can do about it. These days tenants seem to think private landlords are charities.

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    So ive always paid my Landlgods never owed rent prior to a section 21 but have been forced to move 7 times in 20 years, so what do you tell me ?

     
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    Become a better tenant.

     
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    Basically David it would seem you are a very bitter man

     
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    David, what's the longest tenancy you are prepared to sign up to (without breaks etc...)

     
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    Yes, but will the Government listen?, no! They will pander to the silly Socialist minded organisations that blindly condemn all Landlords.
    I have not increased rents for 3 Years, because I know things are tough for my Tenants, but with all this new regulation I will be forced to charge more. So well done Government, yet another Home goal.

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    I can’t shake the growing belief that the government would like to eliminate the PRS as far as possible. All their actions stack up to this:
    1.increased taxes, regulation and draconian licensing schemes
    2. Persistent vilification of all private landlords
    3. Using EPC (with its moving goalposts in future) to make existing stock obsolete
    4. Exemptions for council properties, or properties used by housing associations for licensing schemes and EPC targets.
    5. Introduction of right to buy, being expanded to Housing association and possibly even, in the future private lets.

    Point 4 means, if you’re a landlord with a poor EPC, your only option will be to sell at a reduced price or offer it up to housing associations, which, in turn could lead to forced sales to social housing tenants - at a price you don’t get to choose.

    All the new measure and the direction it’s going in - of course they can’t just come out and say “we want rid of PRS so it can all go corporate”. So they claim to be trying to fix problems that don’t really exist.

    Just like with green taxes for fuel - the real aim is we don’t have cars. BTW did you know EU green taxes will not be levied on private jets and corporate jets? Hmmmm

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    Boris has clearly stated he wants to make the PRS smaller - the problem is no one hs worked out where all these tenants are going to live! Us leaving the sector doesn't put deposits & mortgages into their hands and not everyone wants to to can afford to buy.

     
  • Debbie Boyes

    I have been a Landlord for 30 years and also own a Letting Agents, Fleur Lettings in Dorset and a Buy to Let mortgage business Willowlace Ltd. Also a number of my staff are Tenants themselves, so I see this market from many sides.

    As soon as the taxation alterations were announced it was obvious that Landlords would move out of the rental arena, reducing private rental stock and under the basic rules of supply and demand, pushing up rental prices.

    It was a short sighted piece of taxation legislation designed, I think, to capture votes from those people who believe that all Landlords are nasty, money grabbing people, rather than hard working people, looking to secure their long term financial security and provide a social service (ie supplementing the UK rental stock).

    In my experience, most Landlords are decent people not rogues, but the changes in regulation alongside the taxation regime assume the worst of ALL Landlords.

    Somehow the Letting market, Landlords, Letting Agents, Accountants, Solicitors, Mortgage Lenders etc need to take a cogent approach to lobbying the Government to recognise and appreciate the benefits that Landlords offer and their financial commitment to the sector. Any suggestions on how we can achieve this?

  • George Dawes

    I suppose the government are judging landlords by their own low standards

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    Karen, so sad and so true if we get a property vacant we have to take the opportunity to do the work costing us thousands of £’s to comply with the newly invented rules and or if a licensing requirements are needed pay the Council’s £1500. for the work we have done on top. Just add your time & several months rent loss in the vacant period forcing you to increase the rent for re-let, hence making your property too expensive for Tenants so they are off at their first opportunity. Then they want to talk about a rent cap probably a fools cap.

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    Stephen. I agree with most of what you say but the attack started in 2006 following 2 Jags John Prescott 2004 housing Act.
    There has been an endless number of attacks since I have mention them before on various occasions so I won’t bore you again, no Queensbury rules for him, he got a knighthood instead.

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    At last someone realising the part we play and that the majority of us are not ‘rogue landlords’!
    As many of you say however..will anybody listen!

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    Tax experts warn Government to lay off LL’s, are they getting worried about loosing their golden goose.
    REMOVAL of SECTION 21 is an under statement. IT IS THE REMOVAL OF “THE ASSURED SHORTHOLD TENANCY”
    no more AST. Auction lists full of Flats & houses, Blocks of
    Flats and whole Portfolio’s, this is the damage they are wilfully doing.

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    David Edmonds my friend I am right here, always here through thick & thin since I first bought at Athawes Auction, in Connaught Auction Rooms in Holborn in 1972.
    Sorry you have had bad some experiences but we all get knock’s along the line, you seem to be a financially stable guy if I may say so. What on Earth are you doing renting for 20 years. Best wishes.

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    An observation I take from David’s 15 year comment it co-insides with the introduction of Licensing Scheme’s.
    Section 21 was introduced in 1988 so that’s 19 years prior to the 15 years referred to.

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    I would like Dave Edmonds to explain himself. I know of people who rent a property on a 2 year contract, good payers to start of then start skimming the payments, if they are cute, it doesn't get noticed. Then when it does and a backlog has built up, and the landlord or agent seeks to recover, go into dispute mode. Stop paying then go through the motions of section 21 etc and viola, it's 3 years and one owes a lot of rent. Another property is lined up and off you pop, making it a nice little earner and leaving lots of debt behind, sky, broadband,h.p. etc. Nice work if you can get it. Obviously not you,is it Dave.?

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    David Edmonds - It would be interesting to know a bit more about your renting history.
    Did you rent via a letting agent or direct with landlords?
    Did your landlords have multiple properties or just one?
    Were you renting as an individual or part of a joint tenancy?
    Did they ever state reasons for the Section 21?
    Were you always under the impression it would be a long term let or did you know in advance some of them would be time limited?

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    Dave Edmunds - The basic premise which underscores all properties let in the private sector is that they are not guaranteed… ever ! If you want that security then you either buy or rent from the local authority (if you can). A landlord is not a seer, he or she cannot see into the future, their own personal lives can change direction, and with that change can come a total reevaluation of the property they own…. It’s not wrong or right, it’s life, and an integral part of the market you have chosen to be a part of.

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    Simon - I don't fully agree with that. Some of us are in it for the long haul and feel a great sense of responsibility towards our tenants. I've been a landlord without any gaps since 1998 and had a couple of stints before that. My son intends to take over from me in the fullness of time. As far as I'm concerned my tenants have homes for as long as they want (as long as they behave in an appropriate fashion).

     
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    Well you can buy but not that simple, the Mortgage / lender don’t guarantee your home, miss payments and you’ll find out, they are even less tolerant than many Private Landlords and have far more power, they don’t need S21 they are guaranteed possession.
    The Councils property may not be for life either. I seen it Mom & Dad passed away their daughter was expecting to remain having lived there all her life, there is some small grace period but she has been told she’ll have to find shared accommodation, so there is nothing guarantees in life not least don’t expect others to under write guaranteed for you.

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    Jo - I do not disagree with you, your intention today (June 13th) is as you say, but should you pass away in a weeks time, and your NOK decides he or she wishes to sell up and travel the world then those tenants told a week ago that they have a home for life will be in for a shock ! No one, not a single person has control on what others do after their passing, a lot try… and fail , although they are unaware for obvious reasons. I still standby my opinion that the PRS is not secure, and can never be.

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    I know someone who became ill and was put into to long term care, the social workers sold her house,pocketed the money, then she got better, came out of her nursing home and was homeless !

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