21 Oct 2022
Jeremy Hunt’s firm grasp of fiscal policy after the market turmoil of recent weeks won’t stop what one housing expert calls “a mass exodus of landlords” in the near future.
Jonathan Rolande of the National Association of Property Buyers says: “The grim reality is that tenants are set to face eviction, or huge rent rises because increasing numbers of landlords are looking for a solution to the latest chapter of the housing crisis that now is affecting them.
“Despite a steadier hand on the wheel, the economic ship is far from calm waters even if, for now, the iceberg has been avoided. Landlords were already reeling from legislation and tax increases that hit profits hard. Now they are facing the prospect of huge rises in their mortgage repayments at a time when their asset – the property – looks set to drop in value.”
The NAPB is now calling for a new set of measures.
These could include a temporary rise on Capital Gains Tax on profits from property sales, deterring all but the most desperate from selling up.
Rolande continues: “Rewarding those landlords who offer longer-term letting with fixed, sensible increases with tax breaks would be a popular move too. Landlords are set to experience difficulties ahead. But tenants have been paying the price through the good times and the bad. It’s time to use the existing tax system tactically, to redress the balance.
“Even before the recent turmoil, a yield of 5.0 per cent was considered good. And that’s before expenses of a managing agent, repairs, annual safety checks, redecorating between tenancies – the list goes on and on. Now with interest rates on borrowing doubling, and rates on cash in the bank increasing, an income of 5.0 per cent before costs is looking dire.”
Predicting what will come next he adds: “Many landlords are considering their options. Some will look to move out the tenant and try to sell or sit tight, hope for the best and ratchet up the rent to make the figures work. Either way, many tenants face paying the price for the state we’re in.
“It seems especially unfair as, when times were better and interest rates fell – down to 0.1 per cent in 2020 – how many landlords called their tenants to share the good news and reduce rents accordingly? Not many. Rents continued to rise as demand soared and supply dwindled.
“Just as we thought things couldn’t get any more unbalanced, a mass exodus of landlords will lead to higher rents, justifying increases to those staying put in their homes.”
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