Government urged to do more to stop ‘good landlords leaving the market’

Tax changes and increasing regulation could lead to a significant increase in the number of landlords exiting the private rented sector, warns Propertymark.

In its representation to the chancellor’s Autumn Budget and Spending Review 2021, Propertymark argues that without a support package for tackling Covid-induced tenant debt and a reformed court system landlords could leave the already struggling sector in droves.

The trade body points to a recent Mortgage Works survey that shows a fifth – 20% – of landlords are considering selling all – or at least part – of their portfolios in the next 12 months.

Propertymark cites a combination of moving goal posts, tax implications, tenant debt and a backlog in the courts as reason many smaller portfolio landlords are being left with little options.

For many buy-to-let landlords, income from rent makes up a significant proportion of their total gross income, making them highly vulnerable when their tenants build up rent arrears.

Propertymark says the effect on landlords has been compounded over the pandemic and official government figures show the proportion of private renters in arrears has tripled during the pandemic, from 3% between April 2019 and March 2020 to 9% during November and December 2020.

Propertymark has warned that if the upward trend in this data continues the number of renters in arears could reach almost 800,000 by the end of 2021.

Mark Hayward
Mark Hayward

The trade body argues that an exodus of landlords would be catastrophic for the housing system, including the many people who rely on the PRS to meet their housing needs.

Mark Hayward, chief policy advisor for Propertymark, said: “We are urging the UK government to look at the bigger picture here. It’s not about propping up landlords but more about doing the right thing for the country as we work to build back better from the devastating effects of the pandemic.

“Ultimately the housing system needs to work for everyone, but landlords are being asked to carry too much of the financial burden caused by the pandemic. We are risking good landlords leaving the market.

“The private rented sector supports five million households in the UK and is an important provider of homes against a backdrop of an overwhelmed social housing system.

“However, at the moment, the risks associated with being a landlord are incredibly high and the financial help for tenants and landlords struggling under the weight of accumulated Covid-related debt is inadequate.”

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9 Comments

  1. MrManyUnits

    BTL although not classed as a business, the removal of interest relief changed the goal posts to being taxed on turnover not profit. Future Rent caps and the possibility of S.21 withdrawal is definitely making many LL nervous coupled with forthcoming stagnation of capital growth and this being under the Conservative watch.
    Well done shelter justifying your outrageous salaries.
     

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  2. Will2

    The big question landlords will be asking is can they trust ANY government?  The banning of S21 will be the final straw whilst giving security to bad tenants and other parties constantly banging on about rent controls. The system was generally working quite well until it bacame the whipping boy for political lunatics.  I am sure good landlords did not have a significant problem with improving standards on safety matters.

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  3. LVW4

    I am just one of many LLs who have seen their rental income decimated by the government’s lack of support for tenants and LLs, feckless tenants taking advantage of lockdown, and taxation and regulation. I lost my employment at the start of lockdown, and then losing £12,000 on one tenant has been a kick in the teeth, and I will exit the PRS. It may not sound much, but by the time I’ve left, there will be 4 less desperately needed family homes available to rent.

    I’ve looked after my tenants for 18 years, rarely increased rents, and always responded to maintenance issues. I thought I had a social conscience, but this experience has really hurt. It’s certainly destroyed my lifelong support for the Conservatives and I will now move my support to Reform.

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    1. Bosky

      Still, nice profit on the capital gain, less tax of course.

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      1. LVW4

        Nice yield, nice profit, no hassle, nice gain, and a big fat tax bill in London. Average yield, low profit, lots of hassle, and very little gain in Yorkshire, wiped out by one feckless tenant.

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  4. PossessionFriendUK39

    Its becoming clear that  Propertymark are better at standing up for Landlords than their ‘own’ [sic]   NRLA  !

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  5. Gromit

    When will the Government (and all the Tenant support groups like Shelter, Generation Rent, ACORN, et al.) realise that creating new laws to tackle rogue Landlords (without rigorous enforcement) is counter-productive. Without proper enforcement rogue Landlords just ignore the new laws (just as they ignore all other laws), and adds costs/hassle to law abiding good landlords who either have to put rents to cover the added costs or decide to throw in the towel and sell-up. The net result is decent properties become less affordable, and there are far fewer rental properties available limiting tenants ability to move as their needs change and are driven into the hands of the rogue Landlords who can undercut decent Landlords with their sub-standard properties.

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    1. LVW4

      Not having rogue landlords would defeat their purpose in life, and halt their taxpayer-funded gravy train. Can you imagine Polly Neate’s only message being investment by private landlords delivers good quality, well managed, affordable, safe and regulated housing for those who can’t or don’t wish to buy their own homes.

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  6. Gromit

    The rate they are going at the only Landlords left will be the rogues

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