Budget 2024: Landlords let down by the government again. What to do?

Budget 2024: Landlords let down by the government again. What to do?

10:06 AM, 8th March 2024, About 3 months ago 10

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This week’s Budget brought significant changes for landlords, with implications for capital gains tax (CGT), furnished holiday lets relief, and multiple dwellings relief.

As the dust is still settling, let’s consider their impact on our investments and the rental market.

In a speech that only had one bright spot – the gag at the expense of Angela Rayner and her issues over selling a council house, who obviously didn’t enjoy it – there wasn’t much to enjoy.

On the one hand, the reduction in CGT rates is a mixed blessing. It will provide relief for those landlords considering selling their properties.

However, for those who’ve recently sold, it’s a missed opportunity.

Chancellor Jeremy Hunt’s apparent push for landlords to sell may boost Treasury coffers, but it leaves us grappling with uncertainty.

A lot of landlords who are gearing up to sell

While the CGT cut seems favourable, there will be a lot of landlords who are gearing up to sell because of the Renters (Reform) Bill.

This will certainly put the cat among the pigeons as landlords face a new reality of effectively losing control of their rented properties.

Instead of pushing landlords towards the door marked exit, perhaps the government could have taken this opportunity to encourage new investors into the sector.

And they could have given a not-too-subtle hint that the Bill would be redrafted to strike a balance between tenant rights and landlord viability.

That won’t happen. Nothing that benefits landlords in the current world will.

I also thought the shift in National Insurance (NI) rates was a bit like rearranging the deck chairs on the Titanic.

It’s not that long ago that we had to pay more to help meet the growing social care bill.

Which is it? Do we need more money for pensions and the NHS or not?

Sympathy for landlords with holiday lets

But I have huge sympathy for landlords with holiday lets, especially those who left the PRS to enjoy better returns.

These were better returns under a welcoming tax regime to help make up for the extra work that goes into holiday accommodation.

So, if these fed-up landlords decide to bail, what will happen?

The government seems to think that other landlords and first-time buyers will be queueing up to buy.

I doubt that very much.

I’m predicting that while some will buy pricey homes in holiday locations, they won’t be first-time buyers – a fair chunk of those sales will be to holiday homeowners.

So, the areas that pushed for this will lose out twice over – house prices won’t fall, and you’ll have fewer people spending hard cash in your shops and pubs.

Homes return to private letting to help meet demand

The other potential route is that the homes return to private letting to help meet demand and keep rents down.

This is, I fear, wishful thinking on the part of those who don’t understand how the PRS works.

Because the big issue is that landlords are watching the progress of the Renters (Reform) Bill with bated breath.

If it passes in its current form, the whistle will blow on a fire sale of PRS homes.

That will see renters evicted, the courts clogged with eviction cases, houses being sold and renting supply going downhill.

I keep referring to the unintended consequences of actions and the government, yet again, illustrates its lack of joined-up thinking.

Now here I was going to have a crack at Generation Rent saying that the removal of the relief doesn’t help tenants, but I won’t.

Impact of the Budget and the Renters (Reform) Bill

Instead, I think all landlords should focus on the lack of effort being made to explain what the impact of the Budget and the Renters (Reform) Bill will be.

I winced when I read the NRLA Budget statement about not revitalising long-term investment in rented homes because the government is focused on short term gains (it’s an election year, you dummies).

They say removing the FHL relief and reducing CGT won’t make a difference in the supply of rented homes.

The NRLA lists how many tenants apply for each home, how many homeless families we have and the social housing waiting list.

But nothing about how hard business is becoming for landlords.

No discussion about section 24.

Nothing about improving evictions to make them quicker.

I couldn’t tell the difference between this media statement and the one put out by Generation Rent.

Brutally frank conversation with the people

Landlords need to have a brutally frank conversation with the people of this country – unlikely with the mainstream media we have.

We need to explain that rising interest rates make it very difficult to remain in the PRS.

And as we leave, tenants will have to deal with higher rents and less choice.

Let’s face it, this was a Budget aimed at helping landlords sell up to benefit first-time buyers.

Holiday let landlords were probably ringing the estate agents while Hunt was still on his feet.

Plus, lots of other landlords in the PRS will have reached for their calculators and spreadsheets.

After the Budget, I thought about Emperor Nero fiddling while Rome burned to the ground.

That’s the private rented and holiday let sectors today, everything is turning to ashes and the likes of Ben Beadle and the NRLA are holding the fiddle.

Until next time,

The Landlord Crusader


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Comments

Anne Nixon

10:46 AM, 8th March 2024, About 3 months ago

The Tories have managed to cleverly (!?!?) engineer themselves into a lose lose situation with the electorate, losing the support of their natural support base, landlords, with their relentless onslaught over recent years while not appealing to the likes of GR either.
What happens now is absolutely of their own making and they deserve all they get.

Beaver

11:06 AM, 8th March 2024, About 3 months ago

I suspect that "...this was a Budget aimed at helping landlords sell up to benefit first-time buyers" may be true.

I think this is correct. I have a friend though who is very wealthy and used to own three houses. One of them is a house in Cornwall. He tried renting that out to people but found that people who used it as a short-term let didn't treat it with respect and as he didn't want the hassle of doing that he kept it, but didn't sell it. Or at least, he didn't sell it for a few years.

I suspect that many of those holiday homes will be kept as an investment or sold to other rich people. And some may be sold into companies who presumably can just deduct all their finance costs (unlike small portfolio landlords like me).

I can't see first-time buyers being able to buy those expensive houses in Cornwall. So, I think the question remains; whether it's houses on Arran, in Cornwall or the Gower Peninsula, how do you make renting those houses out attractive to small landlords? At the moment I suspect that your best option is to hold them in a company.

TJP

11:21 AM, 8th March 2024, About 3 months ago

Time to abandon the brain-dead socialist Conservatives and vote Reform UK

Michael Booth

9:09 AM, 9th March 2024, About 3 months ago

If anyone thinks this lot are bad wait until liebor get in and further devistate the prs .

Katy Ann

9:40 AM, 9th March 2024, About 3 months ago

Reply to the comment left by Beaver at 08/03/2024 - 11:06
First time buyers won’t buy four bed houses. But people in 2 and 3 bed houses will, and the first time buyers will buy their houses.

Stella

9:56 AM, 9th March 2024, About 3 months ago

Reply to the comment left by Michael Booth at 09/03/2024 - 09:09
Yes it will not just be Angela Rayner but all the far - left - wingers who have been playing the game and keeping a low profile for now, who will come to the fore and we will have some of the politics of Kim Jon Un

Cider Drinker

10:13 AM, 9th March 2024, About 3 months ago

Reply to the comment left by Katy Ann at 09/03/2024 - 09:40
First time buyers working in hospitality (if the tourism trade isn’t decimated) won’t be buying 2 and 3 bedroom houses in coastal towns. They won’t have a deposit and there’s little hope that they will be able to get a mortgage.

The people that can afford to buy these properties are retirees from outside the area.

I am so looking forward to election night.

Judith Wordsworth

13:05 PM, 9th March 2024, About 3 months ago

Such a shame that we landlords didn't take up my suggestion when the Renters Reform Bill raised it's head.
My suggestion was for ALL PRS landlords to serve s21 notices on the same day with the same 3 months expiry date. 3 months not the statutory minimum of 2 months.
This I feel would have brought Government and Local Authorities to work with, and not against, PRS landlords as the possibility of 4.7m families being made homeless on the same day would have caused a national crisis.
An opportunity missed!

Cider Drinker

14:08 PM, 9th March 2024, About 3 months ago

Reply to the comment left by Judith Wordsworth at 09/03/2024 - 13:05
It wouldn’t have worked because tenants would not be homeless on the same day. The Court process acts as a bottle neck to keep evictions at a manageable rate of flow.

Niknak Harris

17:48 PM, 9th March 2024, About 3 months ago

Reply to the comment left by Anne Nixon at 08/03/2024 - 10:46
I totally agree with you. We have 4 flats that we have rented out since 1997. We have long term happy tenants and are good landlords but now that this RRB is set to be put in motion, with an election looming and likely a next Labour government and with Labours ideas even more terrifying. If the Tories don't get this bill through before the election then it is left for Labour to redefine it.

We as many other landlords are now going to either sell or move back into it ourselves and do it up to sell. Therefore evicting two lots of tenants. This would not have happened ordinarily we would just have continued to rent them. So this bill is actually like shooting one's self in one's own foot. You cannot have a system that is so heavily weighted on the tenant. All governments should have built more homes and now they are targeting unfairly the good landlord. Its likely, ironically that being in a tourist destination, if we sell it will be bought as a 2nd home. Labour intends to redefine this bill to make it nigh on impossible to regain possession, so I predict there will be many landlords preparing to sell or move back into their rentals as we are.

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