Data released by the National Landlords Association has revealed that 20% of landlords are planning to offload properties from their portfolios because of recent government tax changes. The number of landlords selling up has now reached a ten-year high.
Government Policies to Curb Buy to Let
Experts believe this trend is largely down to the loss of mortgage interest tax relief, which is being phased out over a five-year period. Previously, landlords could claim any mortgage interest they paid as a business expense, but not any longer. The government also introduced a 3% Stamp Duty rate on landlords and anyone else with a second or subsequent property. There has also been a ban on tenant fees, so whereas previously tenants had to foot the bill for letting agreements and credit checks, letting agents are being forced are pass the cost on to landlords.
“It is our view that these policies are undermining the viability of many landlords’ businesses and removing the incentives to invest in residential property for business purposes,” says Richard Lambert from the NLA.
Vulnerable People Rely on Landlords
He points out that there is a huge number of people in the UK who rely on the private rental sector to give them a home. If increasing numbers of landlords leave the sector, it creates an even greater housing shortage. Unless the government changes its policies and begins to incentivize the private rental sector, even more landlords will reconsider their property investment portfolios.