Landlords’ confidence has collapsed faster than during the depths of the last financial downturn, to an all-time low, and around 55% in a recent survey said they may have to raise the rent as a result of taxation changes aimed to deter buy-to-let investors from the property market announced in recent Budgets by the Chancellor George Osborne.
Richard Lambert, the Chief Executive of the National Landlords Association (NLA), told a gathering of landlords and property experts hosted by London letting and estate agent Chestertons that more than half of the landlords surveyed by the NLA said they were likely to have to raise rents to cover increased costs and the phasing out of tax relief on mortgage interest payments from 2017.
Chestertons Chief Executive Robert Bartlett also told the assembly held at the Royal Academy of Arts in Piccadilly: “Since 2014 we have been seeing many landlords selling up after a sequence of announcements by political decision-makers, from the Governor of the Bank of England and the Chancellor George Osborne, aimed at cooling the housing market.”
Obi Nnochiri, Senior Consultant at St. James’s Place Wealth Management, also illustrated how the phased withdrawal of mortgage interest relief for higher-rate income tax payers from April 2017 would hit private landlords’ bottom line and could ultimately mean many will not be able to afford to continue renting properties out. If they sell up, he warned, they will additionally be hit with an effective 8% surcharge in capital gains tax on properties sold.
One long-term landlord at the event remarked: “I’ve been letting properties in London since the mid-1980s and this is as gloomy as I have felt about the market during that time.”
Richard Lambert also addressed the issue facing new Mayor of London, Sadiq Khan in his first days in the new role, and particularly how his manifesto pledges to introduce mandatory landlord licensing and rent controls could be implemented.
“Sadiq Khan will try and encourage all London Boroughs to follow Newham’s example and introduce licensing. Labour-led boroughs are likely to fall into line; Conservative ones perhaps less so. But the Mayor can only encourage local authorities to introduce schemes, he cannot compel them to do so. Councils also admit to a lack of enforcement capability and a lack of resources to back schemes up.
“Rent controls could move on to the agenda,” Lambert added, but pointed out these would also need central government approval. “You might not think the Conservatives would back rent caps, but the Government has shown itself both pragmatic and unpredictable, so don’t rule anything out.”