The PRS is on the verge of ‘collapse’

The PRS is on the verge of ‘collapse’

0:02 AM, 12th September 2024, About 4 weeks ago 2

Text Size

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.


Share This Article


Comments

Northern Observer

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

9:31 AM, 12th September 2024, About 4 weeks ago

Section 24 is having a bigger impact on landlords, causing them to sell up or reduce their exposure to the sector.
Combine that with periodic tenancies from day one under the new bill and that could prove to be a tipping point for many landlords.
CGT at income tax levels will definitely deter new investment in BTL acquisitions, exacerbating the situation for tenants who will see even less supply in the market.

dismayed landlord

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

11:54 AM, 12th September 2024, About 4 weeks ago

Reply to the comment left by Northern Observer at 12/09/2024 - 09:31
Really - there is as much media coverage claiming BTL is thriving and new investors are flocking into fill the gaps. David has adverts on here promoting the huge volume of buyers gagging to invest in this lucrative easy trouble free legislation free business!

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Automated Assistant Read More