Book a Demo

Rents are likely to rise throughout this year and 2019, if the government continues to interfere in the private rental sector. This stark warning has come from Belvoir CEO, Dorian Gonsalves. The head of the property franchise company said government interference will lead to further financial burdens for both landlords and tenants. This includes tax changes, stamp duty regulations and the ban on tenant fees.

Belvoir’s rental index for the third quarter last year showed rents increased by an average of only £3 per month, compared to the same quarter in 2016. Dorian felt this showed the rental market works well across the country. However, government policies will have an impact this year, and he believes this will lead to many landlords having to review their rents. He felt many resist raising rents when a tenant is in place, but this could change in 2018 and 2019 because of the impact of the government policies. In the UK, there are more than two million landlords who are investing in property, as it remains a reliable source of income. However, many landlords are considering selling up or are not increasing their portfolio. This stagnation comes at a time when more people are actively seeking rental properties because they cannot afford to buy.

According to the National Landlords Association, one in five UK landlords is thinking about leaving the market or cutting the number of properties within their buy-to-let portfolio in the next 12 months. Changes to the tax system, along with the 3% stamp duty surcharge on second homes, have prompted investors to look at reducing their portfolios. Mike Heynes, of accountancy firm, RSM, said the tax changes are having the biggest impact. He pointed out that even a rise in interest rates of 0.5% could see investors losing money. He pointed out that the potential for capital gains is the main reason why many investors are in the buy-to-let market, rather than for the income they receive from tenants. He added that house prices are actually coming down in some areas. If landlords are investing for the income, then the tax changes are going to have an adverse impact on that. If they decide it is not worthwhile owning property, then it could lead to a slump in the market.

These tax changes will also mean that landlords have to manage their properties more aggressively, if they want to see a return on their investment. David Hollingworth, of London & Country Mortgages, said that many of his clients are remortgaging now to lock-in at low interest rates.

If you’re looking for a new way to manage property inspections, try InventoryBase here for free