Landlords starting to feel ‘the pressure’ to increase rents to offset tax changes

The increasing tax burden on landlords is likely to result in increased rents, according to research from the Intermediary Mortgage Lenders Association (IMLA).

While rental prices continue to be subdued and below the rate of consumer price inflation across much of the UK, as reflected by the latest ONS data, landlords are now facing the challenges of increased legislation and changes to mortgage interest tax relief.

Kate Davies, executive director, IMLA, said: “As buy-to-let borrowers start to feel the effects of income tax changes reflected in their most recent tax bills, the pressure to increase rental prices is likely to mount.”

The association predicts that gross buy-to-let lending will drop 6% to £36bn this year and £35bn in 2020, with landlords acquiring 59,000 buy-to-let properties in the coming year, down from 66,000 last year, reducing the supply and much needed properties in the private rented sector.

The IMLA forecasts that gross mortgage lending will total £269bn in 2019 – a similar level to last year – with remortgaging set to remain roughly unchanged year-on-year at just over £100bn.

Davies commented: “UK Finance figures showed that in Q3 2018, new buy-to-let loans for house purchase were down 15% on Q3 2017 numbers and 50% lower than three years earlier, when the first government changes were announced, marking  the end of a period of growth in the stock of private rental dwellings.

“With landlords set to feel the pain of increased costs and legislation for several more years, the government must act to ensure that no additional measures that risk further eroding the health of the Private Rental Sector are introduced, and that the number of available rental properties does not decrease still further.

“IMLA will continue to monitor the impact of the tax and regulation changes, as many benefit claimants, who would in the past have had access to social housing, continue to rely on the Private Rental Sector.”

We're excited to announce that we're working on building a shiny new website for readers of Landlord Today! As part of this process, commenting on articles will be temporarily disabled. We look forward to sharing our new and improved Landlord Today website with you shortly!