March 24, 2017
Recent changes in the UK rental sector could see tenants’ rents pushed up by as much as 30%.
Numerous factors including the scrapping of tenants fees by the government, changes to tax and the added 3% stamp duty tax has seen landlord and agency profits slashed. This has resulted in a decline in the availability of rental property as landlords reduce their investment in buy-to-let.
David Miles, professor of financial economics at Imperial College London, has called for the planned tax changes for buy-to-let landlords to be scrapped. He said:
“Rather than being a move towards neutrality, as was claimed, [the changes] represent a further penalty against private provision of rented properties by potential suppliers who cannot, or chose not to, invest via a corporate entity”
He goes on to suggest that some rents would need to increase between 20% and 30% in order to offset the losses suffered by independent landlords. He also points out that aspiring first time buyers that need to rent in order to save money for a property will suffer at the hands of these tax changes. The proposal to scrap tenant fees is not necessarily good news for tenants either. A recent study by the UK Association of Letting Agents has found that as fees disappear, letting agents will look to recoup these costs from landlords, who in turn could push up rents to make that money back. As we have discussed before, many young people are happy to rent in the short term while saving, but forced rent increases will only serve to prolong their wait. More on potential rent increases for tenants can be found on the Property Wire website.