Landlords and property agents looking back over 2017 have few reasons to be cheerful. More taxes, abolition of letting agent fees, lower yields, higher property prices and council licensing schemes are just some of the issues they have had to deal with over the past few months. Now, 2018 looks like there will be further changes that landlords will need to face in terms of costs and profitability.
The Chancellor, Philip Hammond, could have used the Autumn Statement to reverse some of the tax reforms that were first introduced by his predecessor, but he chose not to. The good news is that he didn’t bring in any new property taxes either, although some measures he did introduce will affect landlords. Chief executive officer of Belvoir Lettings, Dorian Gonsalves, said he was disappointed with the statement. Gonsalves said there is still an emphasis on home ownership. Many young people do not want the commitment of a mortgage hanging over them for 25 or 30 years. They prefer the flexibility of renting and it is not just the lack of a deposit or high property prices which is putting them off home ownership. The government would do well to take this on board and address the fact that more people are likely to be tenants throughout their lives. Offering tax incentives for landlords to provide quality housing for the increasing number of tenants in the UK would help both the renters and the buy-to-let investors.
The government is committed to building more homes in the UK to help ease the chronic shortage of decent properties, but it needs to look at the demographics of the population to see who needs those properties and whether they are more likely to buy or rent them. Instead, it carries on finding ways to increase home ownership and first-time buyers, even if this is not what many people want.
Instead of helping landlords to invest in properties to suit the growing demands and needs of the country, further measures are being introduced which could cost landlords even more money. In his statement, the Chancellor gave local authorities the opportunity to increase the council tax premium on empty homes from 50% to 100%. So properties which are between tenancies or are being renovated could prove costly. Councils are likely to seize the opportunity, because they are strapped for cash themselves. So this could hit buy-to-let landlords with an empty homes tax to add to all the others, which is hardly an incentive to invest in rundown property to renovate.
Some good news is that buy-to-let landlords will continue to be paid housing benefit directly, rather than through their tenants, if those tenants are in receipt of Universal Credit. Claimants can opt out of this clause to receive rent directly, but almost one-third of all housing benefit claimants already have their rent paid directly to their landlords. This means tenants can be secure that their rent is paid, while landlords can have confidence to rent to people claiming benefits too.