Landlords blame tax burden and costs for rising rents – Propertymark

Landlords blame tax burden and costs for rising rents – Propertymark

0:06 AM, 14th May 2024, About a month ago 2

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Landlords are pointing to tax changes, rising costs and a challenging economic environment for the continuing rise in rents, Propertymark says.

It has spoken to landlords after the Office for National Statistics revealed that rents grew by 6.1% in England, 7% in Wales and 6.8% in Scotland in the year to January.

Now Propertymark is calling for government action to address the growing rent rises.

It argues that tax changes implemented in 2015, which reduced tax relief for mortgage interest and wear-and-tear allowances, have squeezed landlord profit margins.

Propertymark warns of a potential landlord exodus

Propertymark is warning of a potential landlord exodus if the government doesn’t intervene and the lack of action could restrict rental supply further and push up rents for tenants.

It says that the 2015 tax changes have affected one student landlord, who agreed to speak anonymously, about why taxes are making it difficult for him to operate as a landlord.

He says that landlords ‘are on the frontline politically’ and that it is wrong to blame landlords ‘as the reason why rents are increasing when that is simply not true’.

He said: “Government support that would be most welcome for us would be tax support or the relaxation of existing thresholds.

“More importantly for me, I would be pleased to see any government be more aware of the positive work we do as landlords and be more considerate and positive towards the industry.”

Partners to the government in the accommodation supply train

He continued: “As a group (private landlords), we manage a huge percentage of rental property, effectively being partners to the government in the accommodation supply train.

“I feel the press and Government’s attitude is biased towards tenants’ issues, and landlords face an uphill battle in this regard.”

One landlord who was asked by Propertymark how they felt about people’s perceptions of them said the media ‘are always on the lookout for bad stories’.

Propertymark says it has recorded the volume of private rented properties dropping – which is causing rents to rise due to a shortage and a growth in demand.

Increasing costs of maintaining properties

Landlords have also highlighted the increasing costs of maintaining properties, with one mentioning a 33% rise in service charges.

Rising interest rates are another concern, making it more expensive to take out buy to let mortgages.

These factors, combined with a shrinking supply of rental properties, are pushing rents upwards.

Propertymark reports that more than half of buy to let properties sold in recent years have left the private rented market.

Landlord described compliance as ‘mad’

The student landlord Propertymark spoke to also described compliance as ‘mad’ and it causes confusion for landlords.

Propertymark also says that 68% of its agent members report an expensive alteration to a rental property beyond the usual maintenance costs.

The organisation says: “A combination of higher taxes, rising costs, and higher interest rates is impacting the private rental sector.

“Neither of the two landlords Propertymark spoke to are planning on cutting back on their portfolios for now, but if the UK Government fails to encourage private rental sector growth, this may lead to more landlords exiting the market in the longer term, as they already have, and furthermore, tenants will suffer for it in the form of higher rents.”


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Comments

PH

12:50 PM, 14th May 2024, About a month ago

My landlords insurance has gone up 50% in 2 years with no claims. I know this is just the tip of the iceberg but it's still relevant.

Michael Booth

14:52 PM, 15th May 2024, About a month ago

Landlord insurance 60% increase, tax increase , repair and maintainance 30/40% increase, cp12 10% increase, licencing 100% , financing costs increase, accounting fees 80% increase and the politians want rent freezing and more rights for tenant , how about HELPING LANDLORDS before you lose a whole lot more than have already left.

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