20% of landlords plan on selling up

by Property 118

3 months ago

20% of landlords plan on selling up

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20% of landlords plan on selling up

The National Landlords Association’s (NLA) latest research shows that 20% of its members plan to reduce the number of properties in their portfolio in the next year – the highest level of intended property sales in 10 years.

The NLA believes this is due to recent tax changes, and has created a series of videos to assess and explain the impact of these changes on landlords and tenants.

The four videos contain research, conducted by Capital Economics for the NLA, which shows that landlords and tenants will pay more than their fair share in tax as a result of changes made by the Government to curb buy-to-let activity in the private rented sector (PRS). These include:

  • The withdrawal of mortgage interest relief for higher and additional rate tax payers
  • A three per cent surcharge on purchases of additional property
  • The banning of upfront letting fees for tenants.

The first video, ‘Taxing homes’, provides an overview of how the sector is likely to look as the policies come into effect. The second video, ‘Hitting landlords hardest’, compares the tax bills of four different people all earning £50,000 through various means. It shows that landlords are paying far more tax than those earning only a wage or salary.

‘What does this mean for landlords?’ looks at the PRS market from a landlord’s perspective and how landlords could respond to the changes. The final video, ‘What does this mean for households?’ shows how tenants may end up paying higher rents and have fewer rental properties to choose from.

Richard Lambert, CEO of the National Landlords Association, said:

“The videos were created to explain simply some quite complex policies, for both landlords and their tenants. They, along with our own research, show that the Government needs to look at the impact these policies will have on the PRS.

“More and more people are relying on this sector for a home, so it is vital that landlords not only provide a high standard of accommodation, but are incentivised to do so by the prospects of a reasonable return on investment.

“It is our view that these policies are undermining the viability of many landlords’ businesses and removing the incentives to invest in residential property for business purposes.”

The videos are available to view at taxinghomes.co.uk.

The Economics of the Tenant Tax

Comments

Doilygal

3 months ago

I’d also be very interested to know how many landlords are selling up due to mandatory Selective Licensing?

money manager

3 months ago

I'd concur with that.

We have sold three units, two to overseas landlords unaffected by S24 and a third to a homeowner, good some might say. The only negative in that is that she had been living at home, not renting, and therefore the PRS is minus 1.

The reduction in PRS won't only be because of S24 but also the pain in the proverbial of portfolio mortgage rules, even replacement is just becoming too onerous.

Monty Bodkin

3 months ago

I'm selling one a year to utilise annual CGT allowances.
And due to increased rents I'm maintaining/increasing my income for doing less work.
15% rent increases across my portfolio directly because of section 24, looking set to continue as the effects of this bite.

Anne Noon

3 months ago

Reply to the comment left by money manager at 12/01/2018 - 10:53
I have just been hit by these new Portfolio landlord rules. I recently applied for a small further advance of £50000 on a property which is about 50 % geared at present, to invest in a btl the mortgage for which was approved under the old rules. I was denied it because BM looked at all my properties, including my ltd co deals , took the total mortgage payments and used a multiplier of 1.45 I think. At 5.5% and said I would not be able to afford to repay them .The 50k would only have cost me 60 per month. The bulk of that mortgage is at 0.35% above base for life. Another property is about 50% geared at 0.75% above base for life. So in order to obtain capital for new projects ( I buy run down properties, do them up and remortgage to release my capital.);.I shall have to sell properties in order to fund further acquisitions with cash. The first property I am likely to sell is one of my HMO properties and serving notice on four very good tenants.
I cannot understand why underwriters do not look at overall ltv's and longevity of the Landlords. I have been doing this on and off for 40 years now.

Daniel Holder

3 months ago

I sold two of my properties last summer and have just gone to market with my last remaining flat. My business wasnt really undermined by recent tax changes but I want to get ahead of the curve and if 20% of landlords sell up I can see that being a panic to the bottom in some towns. I am happy to take gains now and may look at BTL as an investment again. For now, I am actually relieved to get out of BTL, the smart money is out or getting out in many cities, do your sums carefully and objectively.

DC

3 months ago

Reply to the comment left by Keri Blay at 12/01/2018 - 10:25
Three sales over past 18 months for combination of sec 24 and two within Peterborough City Council's recent Selective Licensing area.
Have further properties in Peterborough, which I will sell if Selective Licensing swallows them up, plus other properties outside of Peterborough, as yet unaffected by S/L, but would also sell if necessary.
There isn't much incentive to struggle on if further damage is inflicted on the PRS, which is totally the opposite to my original plan to continue investing in property.
I always voted Conservative until Osborne meddled with the PRS but will probably never do so again. This government have not got a clue and despite what people thought of May, things can only get worse but the thought of the looney left getting in power frightens the hell out of me!

paul thomason

3 months ago

Reply to the comment left by Anne Noon at 12/01/2018 - 12:31
dont sell take e second charge on the property

paul thomason

3 months ago

Reply to the comment left by DC at 12/01/2018 - 18:52
everyone please think aboat tax planning , there are some very simple thinks ie husband and wife and children , if you form a partnership

Monty Bodkin

3 months ago

Reply to the comment left by Daniel Holder at 12/01/2018 - 17:39House prices have increased around 15% on average since Osborne announced section 24.
How is the 'panic to the bottom' panning out for you so far?

NW Landlord

3 months ago

Two up for sale now more going up ok trimming down and I have incorporated aswell but I’ve had enough. The buy to let market for mortgaged portfolio landlords is dead finished untill the fall out from these bonkers Tory policies. This PRA is a nightmare didn’t think I would be bought 5 houses for cash in LTD company been trying to refinance for months gettin doors shut in my face constantly another nail in the coffin.

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