Landlords are continuing to have confidence in the rental market, despite stamp duty and mortgage tax relief changes. A survey shows 72 percent of landlords are considering increasing their buy-to-let portfolio and are not being put off by the three percent stamp duty surcharge from April, or the phasing out of mortgage tax relief. Even the uncertainty following the EU referendum, with steps being made for the UK to leave the EU, has not been a deterrent.
One good reason could be that demand continues to outstrip supply in many areas, which means property is a good investment. Buying properties in good areas will attract tenants, who are often prepared to pay a premium for the right home. Rents are certainly continuing to rise, with an average of £846 in England and Wales in July, according to Your Move. The biggest increase was in South-East England, with average prices rising 14.9 percent to £924, compared to the same month last year. As expected, London is still the most expensive place, with an average monthly rent of £1,273. The main reason for this is because of the severe shortage of properties in this area of high demand.
This market confidence has also been backed up by Connells Survey and Valuation research, which showed buy-to-let valuations were up by 12.7 percent in August. The company’s corporate services director, John Bagshaw, says that now the effects of the new legislation for landlords has been taken on board, activity has gone up sharply. The Bank of England’s decision to cut the base rate for the first time in seven years is also likely to have had an impact too. Increased confidence in the economy and high levels of employment will also have had a positive impact on landlords’ decisions.
However, there is only so much that landlords can do to ease the housing situation. A Royal Institution of Chartered Surveyors report shows demand from tenants rose in July, while the number of new properties available for rent was reduced. A RICS spokesman said that rents could go even higher this year because demand continues to outstrip supply. He warned that the problem extends across the UK, with survey respondents believing there will not be much rental growth in the next 12 months. Many more properties are needed, but landlords and property management companies cannot be expected to deal with the situation on their own.
The PM, Theresa May, has said she wants to tackle the crisis. She has acknowledged the housing deficit needs to be addressed, otherwise prices will carry on rising and young people will find it even more difficult to get onto the property ladder, but a policy needs to be put in place so something actually gets done. Working with landlords could be one step forward to find out what they feel can be done about the situation. Work on more new-builds could also be encouraged across the country, as the crisis is spreading to northern cities.