0:03 AM, 16th June 2023, About 8 months ago 7
The mounting impact of tax and regulatory changes, coupled with the recent spike in buy-to-let mortgage rates, may force a growing number of private landlords out of business, one organisation warns.
The Intermediary Mortgage Lenders Association (IMLA) says the situation could have a detrimental effect on the long-term stability of the private rented sector (PRS), as there is already an imbalance between supply and demand.
It is now calling for more support for landlords who are struggling with fast-rising costs, and more investment in the sector so that landlords don’t sell up and leave.
It points to the RICS April survey which highlights that demand for rental properties has risen by 40%, while landlord instructions have fallen by 31%.
MLA’s executive director, Kate Davies, said: “The PRS serves some 4.6 million households — the equivalent of 11 million people — and represents approximately 19% of the housing market.
“Maintaining the health of the sector is therefore essential if we are to manage the UK’s chronic housing shortage.
“Our report highlights the tough environment that landlords currently find themselves in and, more concerningly, the outlook for the PRS and tenants if policymakers’ approach to the sector doesn’t change.”
She continued: “Demand for rented housing is clearly high, and measures to increase tenant protections are important.
“However, the focus now needs to be on prompting increased investment in the sector and supporting landlords, whose operating costs risk becoming unaffordable.
“If we don’t get the balance right, the result will be higher rents, and lower availability of properties — both of which are bad news for tenants and landlords.”
IMLA also says that rents look set to go up because for higher rate taxpayers investing in buy-to-let properties, they now face a staggering marginal tax rate of 240%.
And as many fixed-rate mortgage deals come to an end, the substantial rate increases now facing landlords will see those costs being passed onto renters.
On top of this, the rising cost of BTL mortgages threatens the livelihoods of private landlords and if the trend continues, it could lead to a ‘decline in the overall health’ of the PRS.
Other factors undermining the PRS, IMLA highlights, include the 2015 restriction on mortgage interest tax deductions, ambiguity over the proposed EPC standards and the Renters’ Reform Bill which is going through Parliament.
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