Reports suggest that landlords are becoming more careful in whom they rent to – and that many are turning away from the residential lettings market altogether. As some commentators argue that the recent financial changes for buy-to-let property owners are to blame, it seems the latest budget may take remedial action with fresh tax incentives.
October saw the release of two new studies into the changing tactics of buy-to-let homeowners. The first, from the National Landlords Association (NLA), surveyed 700 landlords and discovered that 80% were unwilling to rent their property to tenants on housing benefits. The NLA highlights two causes: the earnings squeeze resulting from tax changes and the government’s benefits freeze, which “creates a barrier that prevents claimants from securing the housing they need.”
The second study, conducted by the Residential Landlords Association (RLA) and Sheffield Hallam University, focused particularly on the removal of mortgage tax relief. The change, they found, has meant that 20% of respondents are no longer willing to rent to young people. Many more are also shifting to short-term or holiday lets or increasing rents.
It seems the government is taking notice of this growing concern. Speaking at the Conservative party conference, Secretary of State for Communities and Local Government Sajid Javid suggested that November’s Autumn Budget would include new incentives for people offering tenancies of 12 months or longer. What those would be or how they would apply is yet to be announced.
ARLA Propertymark chief executive David Cox has argued that such measures should include further incentives or the repeal of ‘punitive’ mortgage tax relief restrictions. He also appealed for the reinstatement of the Landlord's Energy Savings Allowance (LESA), which allowed energy-saving improvements to be offset against tax.
As we approach the Autumn Budget and commentators continue to speculate over new measures, and details gradually emerge, landlords may have to wait a little longer before deciding conclusively on long-term plans for their property. In the meantime, managing cash flow will be paramount. That means staying in touch with tenants, and making sure that unpaid debts are recouped promptly and sensitively.
To find out how Dukes can help you reclaim unpaid debts and improve your cash flow, contact us today.