Reduced tax relief is top worry for landlords thinking of selling up
- Budget squeeze on buy-to-let tax relief is a factor for half (50%) of landlords currently looking to sell
- Those currently considering selling represent one-in-ten existing UK landlords
- Fundamental supply crunch continues – as 52% see tenant demand rising, up from 41% a year ago
- Yet landlords are pessimistic on rent rises, expecting growth to slow to just 1.4% over the next year
The Government’s reduction of landlord buy-to-let tax relief to just the 20% basic rate is a major factor for half (50%) of all landlords currently looking to sell, according to a sentiment survey of more than 1,200 landlords conducted by Reeds Rains.
The tax changes, announced as part of 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 when the reforms start to come into force in April 2017, and they are now considering leaving the sector as a result.
This loss of enthusiasm is even dampening the optimism of the 31% of landlords who think that now is a good time to buy rental properties. 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, also introduced as part of the Budget, which includes requirements for landlords to check their tenants’ immigrations 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.