It is being reported in the property market that the number of people investing in the buy-to-let sector is falling at a rapid rate and many existing landlords are selling their properties.
This is likely to be due to changes to tax relief that landlords get in relation to the costs of running a buy to let property which will ultimately result in higher tax bills for many. This will be phased in from April 2017.
Landlords are also be subject to the ‘extra 3% stamp duty’ for a second or non-residential property which was introduced in 2016.
In addition, the Bank of England’s Financial Policy Committee has been granted greater powers over the buy-to-let market, making it harder for many property investors to get a mortgage due to new tougher mortgage affordability tests.
All of this combined is impacting on the activity level in the sector, slowing it down and driving new and small-scale landlords out of the market. This is also evidenced by the Residential Landlords Association (RLA), who have reported that a higher proportion of landlords are taking up membership with them. In the past 18 months, membership of the RLA has doubled from 10,000 to 20,000. This reflects that the buy-to-let landlords operating in the UK are adopting a more professional approach to their lettings business.
Michelle Hayter, Partner in our Dispute Resolution Team, who specialises in advising both landlords and tenants on their property rights and responsibilities. She says “These changes make buy-to-let income much less profitable so it is more difficult for an individual to enter into this market and deal with all the challenges and obligations of being a residential landlord. In some ways this is a good thing, and may have an effect on making renting more safe, legally compliant and secure for tenants. On the flip side, to combat the new tax situations affecting landlords and their rental income, we might expect to see rental rates rise. The private rented sector is a challenging landscape to negotiate, with ever-changing regulation and now, more than ever, landlords need someone they can trust to help them navigate their way through.”
Our Dispute Resolution Team, based in Christchurch, also cover Bournemouth, Poole and the New Forest. If you have any questions, you only have to ask us at Frettens. Please call 01202 499255 and Michelle or the team, will be happy to chat about your situation and you particular requirements.