Tenants face higher rents unless the government does a U-turn on tax changes for buy-to-let investors and existing landlords. According to MakeUrMove, rents could rise by 2.5% this year, meaning tenants will need to find an extra £23 a month for their rents on average. Overall, the online letting agent forecasts that about two million of the UK’s tenants will be facing rent hikes, which would be massive combined total of around £46 million a month. Landlords have faced many increases in expenses recently, including the 3% stamp duty on second and subsequent homes, mortgage relief being phased out, getting rid of the ‘wear and tear’ allowance, and an increase in local authority licensed areas. Next to come is a ban on tenant fees for letting agency firms, with many agents saying they will have to charge landlords more to make up the loss of earnings from fees paid by tenants. In turn, this means landlords will have to raise the rents to offset the additional expenses from agents as well as the tax changes.
In London, about half of all landlords are planning to put up rents. It’s a similar figure in the North East, with 46% of landlords saying they will raise rents, and 45% in Scotland also feel they will have to raise rents because of new legislation and tax changes. MakeUrMove managing director Alexandra Morris said that UK tenants could be left reeling from the biggest impact yet because of changes in the privately-rented sector. She said that tenants are already stretched financially to afford the rent, and any increases could leave them in debt or facing rent arrears. The impact on landlords is also severe, with the MakeUrMove study saying that around one in ten landlords will have to sell up because of these changes. This will then impact on tenants because it will reduce the supply of housing stock, which is already at crisis point. Calls are being made for the government to start finding ways of supporting the private rental sector.
Taxing landlords out of the rental sector is not the right way to solve the housing crisis. The government has the mindset that everyone has the right – and the desire – to own their own home. However, many people will never be able to afford to buy a property, and not everyone wants the burden of a mortgage or the inflexibility that home ownership brings.
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