It is an unsettling time for landlords. The recent Budget has undoubtedly presented challenges for both landlords and brokers.
Our latest landlord survey has found landlords felt largely let down by the Budget. 72% of landlords said they were disappointed by the Budget.
Many were particularly concerned by the increase to stamp duty on second homes and investment properties. Just under 40% of landlords said that this change meant they wouldn’t buy more rental properties. For some, the measure added insult to injury, coming hard on the heels of what one said were restrictive tax measures introduced by the last government.
Those with a portfolio of four to 10 properties were the largest group to say that increased stamp duty would affect them a lot, at 38%. In the group that said ‘a lot’, the largest group by region were those from London and the South East at 38%.
With other changes in the pipeline such as the Renters Rights Bill, landlords’ anxieties are totally understandable.
HOLD STEADY
But perhaps landlords should hold their nerve. Despite current uncertainties, it must be remembered that tenant demand is very much here and hasn’t gone anywhere.
Affordability is still a real challenge for residential buyers and demand continues to outstrip supply. As a result, there is an abundance of tenants ready to rent across the country.
Rental yields are strong and the ratio of tenants to available properties continues to increase. Brokers are supporting their landlord clients with a broad range of requirements and our product range reflects this to help brokers meet those demands.
While only 6% of landlords said they felt positive about the Budget, some said they took a longer, more philosophical view of the buy-to-let market. 30% said the stamp duty rise would only affect them a little and that they would simply rein in their plans. Indeed, some viewed the 2% stamp duty increase as simply not a big deal.
As one landlord put it: “I feel positive because this is my attitude towards property investment over the last 40 years. To me this is a long-term investment and I am not at all looking for benefit in the short-term. Although the government’s action and policy changes can bring disappointment to many, my financial status on buy-to-let is sound and I can take it on.”
THE SENSIBLE VIEW
This more pragmatic, long-term, and what could even be called a rosier, perspective is very sensible. Overall, the buy-to-let sector is incredibly resilient. The sector has survived countless crises and changing governments over the years and continues to thrive.
Yet it is clear from our survey that some landlords feel that the government is forgetting that they provide an essential service.
One landlord told us: “There is a chronic shortage of rental properties. [The stamp duty change] is a lot like taxing a doctor extra for curing a patient.”
There is even a feeling amongst the landlords we spoke to that there is a certain amount of ‘landlord bashing.’
BE PATIENT
With the ongoing housing crisis, the last thing the housing market needs is an exodus of good landlords. Whether the new government can reach its ambitious housebuilding targets is up for debate. What is certain is that fixing the market will take time. The buy-to-let sector needs to be allowed to continue to play a vital role in the health and prosperity of the UK housing market, helping to provide much needed accommodation.
To ensure this happens, the government must nurture confidence, calm anxieties and reassure the sector that it is on the side of decent landlords.
As a buy-to-let lender we remain committed to playing our part, innovating to meet the needs of landlords.
