Landlords will ‘sell up’ because of tax changes, claim

The Government’s reduction of landlord buy-to-let tax relief to the 20% basic rate is a major factor for half of all landlords currently looking to sell.

Landlords are also concerned about the Right to Rent checks required from February 1.

The tax changes, announced in the summer Budget, are proving a major concern for buy-to-let investors.

Currently, 9% of landlords think it’s a good time to sell up, with the tax reforms influencing their decision more than any other factor.

Many fear letting out a property will become far less profitable and they are now considering leaving the sector as a result.

Fewer than one third – 31% – of landlords think now is a good time to buy, according to a sentiment survey of more than 1,200 landlords conducted by LSL firms Your Move and Reeds Rains.

Overall two-fifths of UK landlords (44%) believe investing in buy-to-let property is more complicated than it was six months ago.

This is due to more rigorous regulation, including requirements for landlords to check their tenants’ immigration status before they let their properties.

Almost a fifth of landlords (19%) are daunted by this task, and now feel unequipped to let out their houses without the support of letting agents to manage their investment.

Nearly a quarter of landlords (24%) believe the legislation on letting out properties has become more confusing, with more than one in ten (11%) feeling that they don’t fully understand the current regulations.

These changes are denting landlord confidence, and general disenchantment with the letting industry was an important factor for 23% of landlords who think now is a good time to sell.

Adrian Gill, director of Your Move and Reeds Rains, said: “Landlords could be forgiven for feeling a little deflated at the moment and it’s worrying to see this may motivate many to reconsider their investment.”

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7 Comments

  1. smile please

    Not sure this will lead to many more properties on the books. Many investors not only want the rental income but equity grow. Not many investments you get a regular income and the “fund” continues to increase. Second we have apathy…. I am sure a lot of investors are unhappy and talking about selling but let’s see how many do. Once they have looked at estate agent costs , solicitors etc I think they will swallow the changes.

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    1. mat109

      With respect I think this is a misconception- many investments do. Shares do (they pay dividend and the price changes). Bonds do. Funds do.

      The only difference is that you can’t get a loan to buy lots of shares. And if you did, you wouldn’t be able to claim tax relief on the loan charges.

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      1. smile please

        Not all properties are bought with a loan though.

        Also the monthly income of hundreds if not thousands of pounds plus capital growth of predicted 5% for the next 4 years and that property is still considered a safe long term investment puts shares, bonds and funds in the shade.

        If you invest £100,000 in a share, bond or fund today can you take a £500 per month income form the next month without effecting the capital and still get expected 5% growth (11% this year).

        I received my dividends recently in well performing shares and it was nothing to brag about.

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  2. Anthony

    The numbers and returns are still great. You earn money you pay tax – simples… We would all like to pay less tax, but that will never happen. The complicating of the legislation and rules might mean it more business for good letting agents – fingers crossed and holding my breath

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  3. surreymac

    For the vast majority of ” Mom & Pop” BTL investors looking to create a future nest egg, the investment was driven by potential capital growth. The amount of tax relief as a high rate tax payer, was in my opinion never a factor and as such unlikely to have any significant impact.

    For professional landlords I have some sympathy. Attacking a group who are absolutely crucial in meeting the housing needs of large element of the UK population seems pretty dumb on the surface. However, it is fairly obvious that Osborne’s city chums are now piling into “build to rent ” and the private rented sector like there is no tomorrow. It may be a just a coincidence that there businesses will be unaffected by the future tax changes.

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  4. Anonymous Coward

    I haven’t seen a mad rush of ex-rental properties coming on the books so far.

    I think it has been one so far for me.

    I have spoken to several landlords about it and most of them end up with the view that “There’s nothing as sure as death and taxes” and are just going to carry on.

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  5. BrandNew

    Has anyone tried to explain to Landlords the ramifications of the new CDM 2015 regulations yet? Oh such fun……..

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