Landlords believe government is against their interests

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There is a general air of pessimism within the landlord community, according to research undertaken by Pegasus Insight.
This is despite the fundamentals for the private rented sector (PRS) remaining robust, with strong tenant demand, average yields reaching a 10-year high and the vast majority of landlords making a profit on their rental properties, the firm said.
Its latest Landlord Trends report, covering the third quarter of the year, found that most landlords feel the new government is “anti-landlord”, with 91% saying the Labour government will be negative for landlords. The top concerns cited were potential increases in taxes and costs, anti-landlord bias in government policy and loss of control over property and tenant selection.
Landlords are most concerned about changes to CGT (85%), the introduction of rent caps (79%), the removal of Section 21 no-fault evictions (73%), mandatory landlord licensing (54%) and the requirement for properties to reach EPC ‘C’ (51%).
The research found that if the government were to introduce significant changes to or reduce allowances on CGT, 39% of landlords say they would not invest further in the PRS, increasing to 48% of landlords with four or more buy-to-let mortgages. Almost 20% would sell all their properties and exit the market, 16% would sell some properties and a further 21% would consider selling some. In bad news for tenants, 26% of landlords say they would increase rents to offset potential losses in the event of a change to the CGT rules.
Only 6% of landlords say they plan to expand their property portfolio in 2025, while 41% mean to sell property next year. Leveraged landlords with outstanding buy-to-let mortgages are more inclined to sell (46%) than those who own outright (34%). The very largest landlords are most likely to divest themselves of some property, with 59% of those with 20 or more units saying they plan to sell. The main drivers for selling are concerns of possible future rental reforms, a general lack of confidence in the PRS, potential changes to the tax structure, interest rates and the threat of EPC changes.
Pegasus Insight said that this pessimism is widespread despite numerous positive fundamentals. Overall, 79% of landlords report strong tenant demand in the areas where they let. The upward trend in rental yields continues, reaching a 10-year high of 6.5% on average in Q3. And 70% of landlords say they are making a small profit on their rental property, while 17% are managing to turn a ‘large’ profit.
Mark Long, founder and director of Pegasus Insight, said: “This research reveals the depth of concern over the attitude and potential actions of the new government when it comes to the treatment of landlords. This concern is all the more striking given the strong evidence that the sector is in fact thriving, despite the challenging environment it has recently weathered.
“The Chancellor would be wise to heed the warning that imposing a heavier CGT burden on landlords could result in quarter of them increasing rents immediately and a sizeable reduction in the number of properties in the PRS in the near term, leading to yet more rent rises as the supply/demand imbalance worsens over the longer term.
“The PRS is vital to the housing needs of the nation, and it is crucial that this government offers reassurance and support to the landlords who provide homes for almost 20% of our population. Let’s hope this week’s Budget provides landlords with more reasons to be cheerful and confident in the government’s approach for our Q4 report on Landlord Trends.”

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