Small landlords disappear amid rise of corporate landlords providing temporary accommodation

I think the picture is slightly more complicated than what looks like a description of AirBnB.

George Osborne (conservative) introduced legislation stopping landlords from offsetting their finance costs against rents. There’s no point in being overly critical of the conservatives as I suspect that had they been around long enough Gordon Brown’s government would have done something similar. The SNP in Scotland were even worse with their rent controls; and labour is continuing the attack on small landlords via their Renters Reform Bill.

If as a landlord your income is below £50K gross per annum you can still get a tax credit enabling you to pay 20% tax rather than 40%. But if you are using buy to let to supplement a pension, or you are in receipt of benefits, then because that’s £50K gross, not net, it’s easy to exceed the £50K gross threshold and be nailed by the 40% tax band.

On top of that, if the government wants to ban landlords from renting out properties at band D or below then for many properties the only solution is to invest in the property and increase the rent to cover the additional finance costs. Because this is capital investment you cannot always right the costs off against your rents and the necessary increase in rents will push you further into the 40% tax band so that you have to increase the rent even further to cover the additional tax. None of this benefits tenants in any way.

What all that means is that if you are going to be in buy to let for the long term then at the moment the only thing that makes sense financially is a limited company. But the government has also pursued policies, and is continuing to pursue policies, that make it much more risky to take on long term tenants than it is, for example, to rent out on AirBnB. And not only is AirBnB less risky, it’s also much more profitable than renting to long-term tenants, i.e. to working families.

The effect of all the main parties’ policies in this area over the last decade or so have been lamentable for both landlords and tenants. The effect of George Osborne stopping small landlords from offsetting their finance costs (when, for example a small business or limited company can) is that this disproportionately penalised the majority of small portfolio landlords who tended to hold rents down a bit to encourage long-term tenancies and minimise the risk of void periods. But big, incorporated landlords have the staff or resources to employ lawyers or specialists to evict tenants or maximise market rents.

The policy of stopping landlords from offsetting their finance costs when incorporated landlords can distorts the rental market and drives out competition at a time when we need more housing. Labour have no chance of meeting its housing targets without using private finance, i.e. the PRS. We also need not just more housing, but more energy efficient housing and no government…conservative, labour or SNP…has introduced the capital allowances that would encourage more energy efficient housing stock.

None of the main parties have performed effectively in this area over the last 15 years. The Renters Reform Bill is presently trying to make its way through the House of Lords, but the Competition and Markets Authority should take another look at it before it ever sees the light of day because it has the potential to cause a lot of collateral damage and the policy of stopping unincorporated landlords from being able to offset their finance costs, at least for EPC band C and above, is not in any way socially useful.

Well, I can’t say what I’d like to but it involves a bodily function and the fictional occupant of 221b Baker Street.

Essentially, the country’s housing stock is being turned into an abusive extraction business rather like German lignite strip mining or the near total foreign ownership of the nations coffe shops, (Starbucksc- Gates, Costa – Coca Cola), how much Corp. tax do they pay, the practice permeates every sector, even when you die, I think it’s time to take our country back.

Reply to the comment left by moneymanager at 09/07/2025 – 11:27
I think that there are a lot of consequences of pursuing policies like this…a lot of collateral damage.

One of the consequences in recent years has been that AirBnB is more attractive for many landlords than renting to a family on a long-term let. The introduction of the contract with Serco to house asylum seekers will probably also make it far more attractive for many landlords to rent their properties to Serco, take a guaranteed income, and not have the risk of managing tenants under the provisions of the Renters Reform Bill, which look to be a disaster, especially the courts system.

Sometimes the best thing is to do something simple:

A. Get the Competition and Markets Authority to take a look at:

1. The distorting effect of George Osborne’s policy that stops small landlords from offsetting their finance costs, in particular the fact that is favours large incorporated landlords.

2. The contract with Serco that will mop-up accommodation which previously used to be available to house families or homeless people, especially in places like Bradford, our HMO capital.

3. The efficiency of the courts system, that is going to make it less risky for many landlords to hand their properties over to incorporated landlords like Serco, Blackrock or others in order to take a guaranteed rent.

4. The effects on competition and supply of housing generally and market rents of stopping small portfolio landlords (who used to hold rents down) from offsetting their finance costs.

5. The absence of capital allowances that would facilitate investment in energy efficiency, and

6. The effect of punishing small portfolio landlords via the tax system for raising additional capital to fund energy efficiency improvements.

7. The effect on the supply of housing from banning landlords from renting out anything below band C.

There are massive opportunities in the provision of temporary accommodation. It comes with risk but managed well, the rewards are high.

Reply to the comment left by Cider Drinker at 09/07/2025 – 16:43
I think that this is absolutely right. From the government’s point of view I think that they should do A above.

But “B” for me would be to investigate the effect of net-migration on the availability of housing; I don’t think that anybody wants to look at that. But net migration is an opportunity for any landlord who can make more money from the Serco contract and take less risk than managing tenants under the RRB.

“C” would be to get rid of Ed Miliband.

Doing “A” above….ask the Competition and Markets Authority to take another look at it is the simplest thing. This government doesn’t have any understanding of markets and their policies do massive collateral damage.

Reply to the comment left by Beaver at 09/07/2025 – 10:56Great words Beaver just on your Section 24 and EPC D. Get that on the main news when they talk about homeless, and we’d solve 50% of homeless.
Winds me up when they put these homeless articles on and we know the reasons, but they never come ask us.
Or they say the Landlord issued Section 21 No fault and she can’t find anywhere else as they are all £500pm more. Hello? Wake up? What does that tell u? She’s paying £500pm less than she should be and the Landlord is not swallowing that any more with this Section 24, EPC C looming, UC, Selective Licensing, Data fee (a minor I know but totally unnecessary), the list goes on

When Osborne introduce S24, thats the point I started selling when my tenants left – sold 12 which paid off the remaining 6. My next issue will be EPC C requirements. I have 2 at EPC C but will they have to now come up to the ‘new’ EPC C requirements (yet to be published) even if it’s the same tenants. Milliband hasn’t a clue but will push forward and bankrupt us all just to satisfy his own dogma. As for the red queen Rayner she will follow Corbyns policies, I can see some form of rent control looming.

Reply to the comment left by GlanACC at 11/07/2025 – 08:50
George Osborne’s S24 did have a significant effect and did distort the market. I don’t really focus on George Osborne much because I think if Gordon Brown’s government had been around long enough they’d have done something similar.

But this government appears to be too stupid to realise that they can make a policy change and blame George Osborne for a policy that didn’t work.

Penalising the majority of small portfolio landlords for investing in housing when we need more of it, and not introducing the capital allowances to make houses more energy resilient doesn’t do anything socially useful.

The CMA needs to take another look at this.

Well, well, who would have guessed that large corporations, whose only purpose is to make as much money as possible with no moral qualms about who was paying, would monetise property in any egregious way that they could?