The PRS is on the verge of ‘collapse’

The continued attacks on landlords in the private rented sector (PRS) could push the current rental crisis beyond repair, one expert warns.

Octane Capital’s chief executive Jonathan Samuels says a planned rise in Capital Gains Tax in the Autumn Budget by Labour could be the final straw for many landlords.

He warns that landlords are ‘teetering on the edge’.

‘Deter landlords from the sector’

Mr Samuels explains: “It seems that our new Labour government is picking up where its predecessors left off within the rental market landscape, driving legislative changes designed to deter landlords from the sector.

“It’s quite worrying to see that such a large proportion have reduced their portfolio size over the last year, with more planning to do so should the proposed changes to capital gains tax come to fruition.”

He added: “A tenant-first approach is all well and good but the key factor driving the current rental crisis is the lack of available stock and by further penalising landlords, Labour are set to push the current crisis to breaking point.

“Raising rental market standards is an admirable endeavour, but without the homes themselves, rental prices will continue to spiral and it’s tenants that will pay the price, either financially or otherwise.”

66% of landlords have reduced portfolio sizes

The firm has surveyed landlords to gauge their current sentiment within the PRS and found that 66% of landlords had already reduced their portfolio size.

Those landlords point to the prospect of reduced profitability because of previous legislative changes as being the main reason for selling.

Also, a proposal to ban Section 21 ‘no-fault’ evictions under the Renters’ Rights Bill is an issue for older landlords.

They say the prospect of losing Section 21 will have an impact on their retirement plans.

Less confident of their PRS investment

When asked how confident landlords are in the Labour government, 52% said they were less confident of their PRS investment under this government.

In addition, 75% said they feared that Labour would equalise capital gains tax in line with current income tax thresholds in the Autumn Statement.

If implemented, 58% said that it would spur them to reduce the size of their buy to let portfolio as a result.

However, 30% of landlords said they plan to reduce their portfolio size anyway, highlighting a drop in profitability as the driving factor for the decision.

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