Collectively, buy to let landlords contribute an estimated £16.1bn to the UK economy via pre-tax spending, according to research from Kent Reliance, the mortgage lender. This is almost double the original estimate of £8.5bn made a decade ago.
The most recent Tracking Landlords Cost and Economic Contributions study, which is part of the Buy to Let Britain series of research, stated that spending on each property stood at £3,571 before mortgage or tax interest.
However, 36 per cent of landlords are searching for ways to reduce their annual spending, as they feel the impact of higher taxes and rising running costs, the study showed.
Maintenance and property upkeep ranked as the most popular areas for potential cost cutting, with 46 per cent of landlords considering this option. This was followed closely by property improvement, with 38 per cent of landlords considering cutting back in this area. 29 per cent of landlords hoped to cut back on their mortgage interest payments, while 24 per cent, almost one quarter, hoped to save on the amount they pay on letting agent fees.
The study also found that if fees for landlords increase as the Tenants Fees Bill comes into force from 1st June 2019, a greater number of landlords may shop around or self manage their portfolios. Meanwhile, according to the study, one in five landlords are planning to increase rents in order to cover the increased costs they face.
Sales Director at OneSavings Bank, Adrian Moloney, claimed that the political discourse surrounding the private rented sector has been extremely one-sided. The significant economic contribution that landlords make is often overlooked, which supports thousands of jobs through landlord spending, in addition to housing a large percentage of the UK’s workforce. Instead, landlords have been punished by punitive regulatory and tax changes, all at a time when the running costs for landlords are climbing.
Policies which have increased the complexity and cost of being a landlord do not benefit tenants, as property investors will search for ways to protect their business margins. This could entail raising rents or cutting back in areas such as property improvement and maintenance. These recent reforms have also deterred new investment in property, especially from new landlords. This does not tackle the chronic under supply of homes in the housing market.
More intervention could prove counterproductive, as many landlords are still coming to terms with the changes. Instead, by aligning fixed-term mortgages to longer term tenancies stability could be brought to the sector, allowing the government and private rental sector to work together and provide a positive outcome.
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