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Around 25% of investors will quit sector following tax changes
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
A new survey of 1,000 buy-to-let landlords has revealed that around one quarter are thinking of quitting the sector as a result of recent and forthcoming tax changes.
The research conducted by the Residential Landlords Association highlights stamp duty surcharges and restrictions on mortgage interest tax relief as the main features.
Rising rents
This follows a previous study that showed that 56% of landlords plan to raise their rents, in order to cope with the tax alterations.
David Smith, policy director at the Residential Landlords Association, said: ‘The RLA’s findings are a worrying sign of the potential trouble ahead for tenants as a result of the previous Chancellor’s tax rises. Any reduction in supply is going to make it more difficult for them to find a place to live and will inevitably drive rents up.’[1]
‘Ahead of the Autumn Statement (next week), we are calling on the new Chancellor to consider the evidence, reverse policy and support growth in the rented sector,’ Mr Smith added.[1]
Around 25% of investors will quit sector following tax changes
Tax burden
The call from Mr Smih and the Residential Landlords Association comes on the heels of another call from Laura Lamb, director of The Mortgage Company.
Lamb feels that the stamp duty surcharge should be aimed at portfolio landlords, as opposed to amateur ones.
‘Responsible lending is very important and I fully support that but stress-testing mortgages rates at 5.5% interest rates with a rent cover of 145% is just ridiculous and will massively limit lending,’ Lamb observed.[2]
‘I would focus more attention on offering more assistance to those trying to buy. The Government has introduced the Help to Buy ISA but it’s only available if you are purchasing a property under £250,000. Most first-time buyers in London and the south are looking at purchase prices in excess of this so they instantly lose out,’ she concluded.[2]
[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/11/a-quarter-of-buy-to-let-investors-will-quit-warns-grade-body
[2] https://www.lettingagenttoday.co.uk/breaking-news/2016/11/hands-off-buy-to-let-mortgage-chief-tells-the-government
