9^th Jan 2019

A leading UK Estate Agents predicts that by the end of 2021 rents will have risen by 7.5% because of the reduction in availability of rental homes coupled with increasing demand from 'new' tenants.

The new draconian tax and legislative regimes pushed onto landlords have and is causing many landlords to sell up, with the trend unlikely to change in the foreseeable future.

For the first time this year landlords are set to considerably lose out when filling out their self assessment tax returns as the phased reductions in mortgage interest tax relief come into force, and any future BTL investments will also be plagued by the extra 3% stamp duty.

There is a continuing rise of new tenants coming into the sector as they simply cannot afford to get on the property housing ladder, because of years of successive governments not funding or 'encouraging' the correct amount of much needed new builds.

The Agency forecasts that this year rents will rise by 2.5% by a further increase of 3% in 2020, followed by another increase of 2% in 2021.

It also states that because of the introduction of the 3% stamp duty surcharge introduced in 2016, 120,000 more landlords have sold their buy-to-let properties than those who bought new ones, causing a reduction in rental homes.

The latest study conducted with 3,000 landlords by a trade body claims that 68% of private landlords are not considering buying any new BTL properties simply because of the extra 3% stamp duty surcharge.

The former Chancellor George Osborne used the excuse for the extra surcharge that he wanted to create a “level playing field” for new homeowners and landlords.

It is in all probability that many landlords have passed on the extra stamp duty penalty onto tenants by increasing rents as the demand for rental homes continues to rise.

A spokesperson for the trade body, said: “The previous Chancellor introduced the stamp duty levy to support first time buyers, yet the figures show this simply is not happening.

“Many of those looking for a place to live are facing a perfect storm – good landlords not prepared to invest in new homes to rent, whilst those same people are unable to access home ownership sectors.”

Richard Merrick of PIMS, said: " We are also aware that RICS (Royal Institute of Chartered Surveyors) has predicted an increase of 15% for rents over the next five years, so it is looking extremely favourable for those staying in the sector.....unless of course the government bestows more 'gifts' upon landlords."

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