Should landlords have the right to refuse DSS tenants?10:43 AM, 20th May 2019
About 4 weeks ago 124
A recent survey Property118.com landlords has revealed that 71% of them will pass on Government tax hikes in the form of increased rents to tenants.
Nearly 1,000 landlords have already responded to the latest survey of Property118 members, the UK’s leading online resource for private landlords to share best practice.
Buy to Let mortgage lending criteria has traditionally allowed for borrowing costs to take up 80% of rent. That figure will be reduced to two thirds as of January 2017. However, the cost of finance isn’t the only cost that private landlords have to pay for. They also have to factor in maintenance, letting costs, compliance, insurance, ground rents, service charges, rent arrears risks and time where the property isn’t let. Profit margins are generally around 20% on rental income received, sometimes a lot less.
Many landlords will be pushed into the higher rate tax band by the tax changes made by George Osborne in his 2015 Summer Budget. This is because finance costs will no longer be an allowable business expense. This will be unique to UK business and will only be applied to private landlords.
Where landlords make a profit margin of 20% or less of gross rents the tax changes will mean they will actually pay more tax than they receive in real profit. This will leave hundreds of thousands of private landlords with three options:-
The stated aim of Government is to help owner occupiers to get onto the housing ladder. However, their motives are questionable.
Even if the Governments stated motive is true, where will displaced tenants live? It is all very well if they can get a mortgage but many can’t or don’t want to. This will leave a larger pool of renters competing to rent a smaller pool of properties. Increased rents are inevitable.
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