Landlords are worried about the future despite a strong PRS

Landlords across the UK are growing increasingly pessimistic about the future of the private rented sector (PRS), despite strong tenant demand and record-high rental yields.

A new report by mortgage market specialist Pegasus Insight reveals that 91% of landlords believe the Labour government will have a negative impact on the sector.

Their primary concerns include potential tax hikes, anti-landlord policies which reduce control over their properties and tenant selection.

Among the specific concerns are changes to Capital Gains Tax (CGT), the introduction of rent caps and the removal of Section 21 no-fault evictions.

Landlords also express their fears over mandatory licensing, and stricter energy efficiency standards.

The treatment of landlords

The firm’s founder, Mark Long, said: “This research reveals the depth of concern over the attitude and potential actions of the new government when it comes to the treatment of landlords.

“This concern is all the more striking given the strong evidence that the sector is in fact thriving, despite the challenging environment it has recently weathered.

“The Chancellor would be wise to heed the warning that imposing a heavier CGT burden on landlords could result in a quarter of them increasing rents immediately and a sizeable reduction in the number of properties in the PRS in the near term, leading to yet more rent rises as the supply/demand imbalance worsens over the longer term.”

He added: “The PRS is vital to the housing needs of the nation, and it is crucial that this government offers reassurance and support to the landlords who provide homes for almost 20% of our population.”

Landlords would not invest

The research also reveals that 39% of landlords would not invest any more into the PRS should the government introduce significant changes to or reduce allowances on CGT.

That rises to 48% of landlords with four or more buy to let mortgages.

Plus, nearly one-in-five landlords would sell all their properties and exit the PRS, while 16% would sell some properties and 21% would consider selling some.

In addition, 26% of landlords say they would increase rents to offset potential losses in the event of a change to the CGT rules.

Just 6% of landlords say they plan to expand their property portfolio, while 41% mean to sell property next year.

Leveraged landlords with outstanding BTL mortgages are more inclined to sell (46%) than those who own outright (34%).

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