Writing on the wall for PRS livelihoods?

Writing on the wall for PRS livelihoods?

11:52 AM, 10th February 2023, About A year ago 18

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Will the mass exodus of landlords wreck the livelihoods of professionals and stakeholders in the private rental sector?

Landlords have sold 400,000 properties since 2019, when the total number of private rental properties peaked at 4.9 million. Shockingly, the downward trajectory looks set to get worse according to a recent landlord survey by Simply business, where 33% of landlords said they are no longer making a profit and plan to sell up.

Based on these statistics 1.5 million rental properties could soon disappear from the market, which will not only affect the tenants but also have a direct impact on the thousands of businesses who earn their livelihoods supporting this sector, such as:

  • Trades People
  • Mortgage Brokers
  • Letting Agents
  • Property Sourcers
  • Estate Agents
  • Accountants
  • Solicitors
  • and so the list goes on …

Those who work in the sector and speak to landlords every day have heard countless stories of how recent interest rate rises have exposed the horrendous effects of the Section 24 restrictions on finance cost relief.  

With interest rates set to remain at current levels (if not higher) for the foreseeable future, is the writing on the wall for the private rental sector?

If private landlords can escape the effects of section 24, then the answer is NO!

One solution is to transfer rental property businesses into a Limited Company. However, many landlords may have considered it and many have incorrectly concluded (without taking sound professional advice from Property118) that incorporation is prohibitively expensive due to Capital Gains Tax, SDLT and the cost of refinancing.  The reality though, in many cases, is there are reliefs available to facilitate the sale of a property rental business to a Limited Company in exchange for shares. It is also possible to use indemnities within the Business Sale and Purchase Agreement to defer refinancing until the end of the existing mortgage term.

Over the past six years, Property 118 and Cotswold Barristers have assisted landlords to move over £2billion of rental property into company structures without the need to refinance, and with the benefit of 100% CGT and SDLT relief. 

If you run a business that relies on the Private Rented Sector, the best way to protect your own business is to help your landlord clients to solve their tax problems.

CLICK HERE TO BOOK a 15-minute chat with me about how we can all help each other.

At Property118, we’re passionate about connecting with UK landlords and property investors who are buying or selling rental properties. Can you help us to do that?

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12:04 PM, 10th February 2023, About A year ago

Will the PRS sector simply reinvent itself in perhaps a different format? Skull scratchers, start scratching?


12:54 PM, 10th February 2023, About A year ago

The writing is on the wall for all businesses in the UK. You never know which sector is going to be attacked by this government. Best to move to Europe, or indeed any foreign country, and start a business in a more entrepreneur friendly environment.

Reluctant Landlord

13:58 PM, 10th February 2023, About A year ago

Reply to the comment left by TheMaluka at 10/02/2023 - 12:54
well as the big boys are getting out and not investing then the government are shooting themselves in the foot and they will HAVE to do something to encourage business.

northern landlord

14:31 PM, 10th February 2023, About A year ago

It is no secret, the Government wants to get rid of the PRS. We landlords complain that the tax regime for us along with registration schemes, EPC changes, court delays and even more tenant rights is driving us out of business. Of course it is, that is what it is supposed to do. I am sure that the Government will take a dim view of PRS landlords incorporating to avoid tax and think that this will be a short lived option that will somehow be treated as a special PRS case (like S24) and closed off.
Why kill off the PRS? “The Evolving Private Rented Sector: Its Contribution and Potential” paper produced by Rugg and Davies at the University of York Centre for Housing Policy in 2018 states ”For well over a decade a stated goal for the PRS by successive English governments has been to encourage large- scale institutional investment in new properties built specifically for the rental market” So it is policy to squeeze the little Landlords who make up most of the PRS out, so big business that really calls the shots with puppet Governments, can muscle in.

Jonathan Chapman

1:59 AM, 11th February 2023, About A year ago

Reply to the comment left by Blodwyn at 10/02/2023 - 12:04
I can not think of anything apart from compulsory purchases of private landlord properties in 2025 if they do not have an EPC rating of C or above.... or is that too sinister?

Jonathan Chapman

2:01 AM, 11th February 2023, About A year ago

Reply to the comment left by TheMaluka at 10/02/2023 - 12:54
I am not sure Europe is the answer either, they all have high taxes apart from some of the smaller havens like Malta and Monaco. But agreed, seems like a lot of pressure on businesses and personal tax payers to cover the financial blackholes caused by inept government spending.

Jonathan Chapman

2:04 AM, 11th February 2023, About A year ago

Reply to the comment left by northern landlord at 10/02/2023 - 14:31
If true then it is good reason to incorporate now and join them, because there seems no chance in beating them!

Dylan Morris

8:56 AM, 11th February 2023, About A year ago

Reply to the comment left by Jonathan Chapman at 11/02/2023 - 01:59Literally anything could happen we’re living in complete clown world now where nothing makes sense any the lunatics are running the asylum.
I see a possibility when we get a Labour administration next year that they’ll scrap the 20% interest credit (Section 24) so no interest and finance costs can be deducted whatsoever as expenses …….and introduce Right To Buy for the PRS. Both of these have been flagged up by Labour in the last few years. Not a certainty of course but normal logical, rules and fairness have gone out of the window.

I have seven rental properties and four of the newest ones will be sold as soon as tenants give notice and leave. Hopefully the remaining three with then be mortgage free so I’m no longer affected by Section 24. So this will be 4 rentals no longer available and I feel do feel sorry for tenants but what can I do it’s not my fault.


9:34 AM, 11th February 2023, About A year ago

Reply to the comment left by Dylan Morris at 11/02/2023 - 08:56
I've heard lots of landlords say that when there current tenants give notice and leave they will be selling.
However, how long are you going to wait for that to happen? Why would the current tenants give notice and leave? Where will they go?

I've had to give notice to a couple of my tenants in houses I want to sell, because they were perfectly happy renting from me in their nice house in a decent area etc and hoped they would be for many more years I suspect. I've got tenants who have been with me for 20 years and several more than 10 years.

The big problem I see is when the tenants can't find anywhere else to go because of the shortage of properties, so on the advice of the council sit tight until they are evicted. So in that case you get the property back in a years time!


11:30 AM, 11th February 2023, About A year ago


For someone with one rental property which I have held in my own name as a higher rate tax payer for the last 17 years would incorporating make sense.
Value of property is now about £280k (with a mortgage of £200k), I paid £180k for it 17 years ago.

I don't rely on the rental income as my main source of income. When I crunched the numbers a couple of years ago, it did not make sense with one property. Not planning on getting another anytime soon.

Any thoughts would be appreciated.

Thank you.

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