Supply Shortage Could Push Rents Up 15%

Rents could rise 15% by 2023 as the supply of new rental properties dries up, according to a survey by the Royal Institution of Chartered Surveyors (RICS). It said small scale landlords are pulling out of the market. It blamed tax changes brought in last year which have made Buy-To-Let investments less profitable. RICS said it was time that the government looked again at the way the private rented sector was regulated. It said its members have seen the supply of new rental property falling consistently for two years. Meanwhile, the majority of its members are seeing steady increases in the number of people looking to rent, although the numbers are levelling off. Read more on the BBC website.

https://www.bbc.co.uk/news/business-45113867

UK Buy-To-Let Investment Slumps 80%

Investment in buy-to-let plummeted to just £5bn in 2017 having been worth £35bn ($48.8bn, €39bn) in 2015. Changes to the tax treatment and mortgage requirements are thought to be behind the slump, which IMLA branded “excessive” and warned against “further punitive action”. As a result of the tax changes, 21% of landlords said they would be reducing their portfolio in the coming year. According to IMLA, buy-to-let landlords have been good for UK housing with adjusted rental costs in real terms falling 4.4%. Read more on the International Adviser website.

https://international-adviser.com/uk-buy-let-investment-slumps-80/

Jump In Landlords Facing Serious Mortgage Arrears

The number of landlords who are seriously behind with their mortgage payments has jumped by 20%. There were 1,200 buy-to-let mortgages in "significant arrears" in the last quarter of 2017, a fifth higher than in the same quarter in 2016. Significant arrears means they owe more than 10% of the outstanding balance. The figures suggest some landlords may be beginning to struggle financially, following a series of tax changes. There were 5,100 buy-to-let mortgages in less serious arrears of 2.5%. This was a 2% rise on 2016. Read more on the BBC website.

http://www.bbc.co.uk/news/business-42989391

Tax Changes To Render Many Landlords Unviable

Recent tax changes could tip many profitable buy-to-lets into loss-making businesses, according to a new report by Standard & Poor’s. The report says those who have invested since 2014 will be hardest hit, with six out of 10 of these landlords potentially looking at unviable businesses by 2021 – when these tax changes are fully implemented. This compares to just 4 per cent of the 160,000 buy-to-let loans it analysed, the vast majority of which were taken out between 2002 and 2016. These changes will cut profits by around a fifth by 2021, with the biggest impact expected to hit BTL investors in the South East and London. Read more on the Mortgage Strategy website.

https://www.mortgagestrategy.co.uk/tax-changes-threaten-profitability-six-10-recent-landlords-sp/

New Report Forecasts Challenging Times For Buy To Let

The buy to let market in the UK will continue to provide good investment opportunities looking ahead but there are challenges, according to a new analysis, the first since major changes to the sector. Landlords will need to adjust and while rents will rise, yields will fall says a report from the Centre for Economics and Business Research (CEBR).  It indicates that tax changes have had some effect on investor behaviour but the market remains a viable one for lenders and investors. The report indicates that yields for landlords are set to decrease over the next 10 years, declining from an average of 5% in 2016 to around 3.5% by 2027 but house price growth remain robust. Read more on Property Wire.

Housing: Prices – Parliamentary Written Answer

Grant Shapps: To ask the Secretary of State for Communities and Local Government, if he will make an assessment of recent trends in buy-to-let cost rises; and what steps his Department is taking to mitigate against any adverse effect from significant changes in property prices.

Gavin Barwell: HMRC’s analysis shows that only 1 in 5 landlords will be affected by the tax changes on property finance costs (such as mortgage interest or interest on loans to buy furnishings). The Government does not expect this to have a large impact on house prices or rent levels due to the small overall proportion of the housing market affected. The Office of Budget Responsibility also expects any impact to be small.

Landlords Scramble To Avoid Higher Buy-To-Let Taxes

Buy to let landlords are scrambling to avoid the impact of tax changes that come into effect next year. The Buy to Let Britain report found landlords were restructuring their portfolios to escape higher taxes on their rental income, which will be phased in from April 2017. Some landlords have set up limited companies while others have increased rents or transferred properties to family members. The average rent in Great Britain has hit a record high of £881 a month, and landlords indicated they intended to raise prices by an average of 5.4% – the equivalent of £571 a year for households. Strong house price growth has pushed the value of rented accommodation in the UK to £1.3tn, up by 16% in the last year to September. Read more on the Guardian website.

Rental Growth Continues

In a boost to landlords and buy to let investors, rents across the UK continued to rise in July, albeit at a slightly slower pace. Rents were up 2.3 per cent year on year in the three month period to the end of July according to the latest HomeLet rental index, while in London they were up 4 per cent compared to 2015. Average rents in the UK have now reached £779 per calendar month, and in London rental prices have reached £1,599 per calendar month. Despite Brexit and the tax changes imposed on the private rental sector, it seems that rental demand still remains strong and is outweighing supply as still not enough new properties are being constructed. Read more on the Residential Landlord website.

Interest In Buy-To-Let Drops By Over A Quarter

Interest in new purchases from buy-to-let investors dropped 27% in March compared to the same month last year as April 1st tax change starts to bite. The fall reverses the upward trend between December and February which saw a 24% year-on-year increase in buy-to-let enquiries, indicating a potential slowdown in new investor purchases at least in the short-term. Demand from home-hunters is at an all-time high with a record number of Q1 enquiries, so the pause from investors could give some first-time buyers more of an opportunity to make a move. Read more on the rightmove blog.

Attacking Buy-To-Let Sector Will Worsen Housing Crisis

The UK needs one million new rental properties by 2021 to meet demand while by 2025 a quarter of households will be in the private rented sector. Faced with rising demand, the Government should be supporting investment in the sector and not, through the recent tax changes relating to buy-to-let, actively discouraging it. As the Commons’ CLG Committee rightly concluded in 2012: “The sector is, and will continue to be, dominated by small companies and individual landlords.” Yet over the last year the Treasury has embarked on a fiscal attack on those small companies and individual landlords. The reasoning is that landlords are occupying or buying up too many homes and so restricting access to affordable stock for would-be home owners and that buy-to-let investors, unlike owner-occupiers, enjoy the full tax-deductibility of interest on mortgage finance costs. Read more on the Daily Telegraph website.

Landlords Are Using Companies To Dodge The Stamp Duty

Buy-to-let mortgage lending is booming ahead of the Chancellor’s tax hike – with a soaring number of landlords reportedly using companies to flout the crackdown. Landlord loans rocketed by 22 per cent in January compared with the same month in 2015, as buyers rush to beat the forthcoming tax changes. From April 1, buyers of second homes will pay 3 per cent additional stamp duty on property purchases. As the proposals stand, individuals who hold more than 15 properties may not have to pay the tax - and companies holding at least that number will be exempt from stamp duty when they buy more. Some specialist landlord firms are now reporting as many as 50 per cent of all sales being made through corporations - a move that could prove to be more beneficial for tax on rental income. Read more on the Daily Mail website.

Is The UK’s Future Buy-To-Let?

Whether it's the government’s consultation on higher Stamp Duty, the Bank of England’s deliberations around extending its macroprudential armoury area or attempts to assess viability against rising interest rates some time in the future, it's hard to escape the endless speculation about the future of buy to let. It's not just developments in the real estate sector that will have a bearing on how this plays out. In light of recent volatility in financial markets, the relative attractions of different asset classes will never be far away from the minds of most investors. But some comfort may arguably be drawn from a recent YouGov survey which found around two-thirds of landlords suggested that they would not take any action in response to the upcoming tax changes. Read more on the RICS website.

Call For UK Wide Housing Review To Access Impact Of Buy Let Tax Change

A long term, strategic comprehensive review of housing policy and housing need in the UK is needed as recent changes are set to distort the property market, it is claimed. In particular, the Government ought to recognise the contribution of private landlords as tax changes could seriously affect the buy to let market to the detriment of those who cannot or choose not to buy a home. In a response to the Government’s new stamp duty regime for second homes, Paragon Mortgages says that there should be a comprehensive review looking at the housing dynamics over the last 30 years. The company also says that there are more significant structural issues at play in the heart of the housing market so the review is needed to look at housing provision across all tenures. Read more on the Property Wire website.

Tory Peer Condemns His Party's 'Attack On Buy-To-Let'

Lord Flight, a former Conservative Shadow Chief Secretary to the Treasury, has attacked the Government’s buy-to-let tax changes, warning they could destabilise Britain's housing market by triggering "a sharp fall in prices, if not a crash". He said the Government's policies also threatened to "put thousands of tenants’ security at risk", predicting that landlords would rush to sell to sell properties having first evicted tenants. Lord Flight is the first prominent politician to openly criticise the Government's surprise assault on private landlords, which will see many pay significantly more tax on their rental income and higher rates of stamp duty.  Read more on the Daily Telegraph website.

Landlords To Launch Legal Challenge To Osborne's Tax Relief Changes

A group representing 250 landlords is to launch a court challenge against tax changes to buy to let coming into force in 2017, claiming they have been victimised by George Osborne.  The landlords have obtained legal advice that they have grounds to mount a judicial review of the tax changes, claiming that it breaches human rights legislation and European law. From 2017, tax relief for buy to let will gradually be cut to a flat rate of 20% compared with the 40% or 45% that some landlords currently enjoy. In the autumn statement the chancellor added an extra 3% stamp duty on buy-to-let purchases. Read more on the Observer website.

'I Own 75 Buy-To-Let Properties but I Haven't Deprived Other Buyers'

The Government is coming under increasing pressure to reverse draconian new taxes applying to buy-to-let investors, announced in the July 8 Summer Budget. Landlords argue that not only will the change force them to evict tenants and sell properties en masse, but that it will also prevent the building and development of new homes - hindering the Government’s objective to increase housing supply. The proposed tax change, applying in full from 2020, will only hit those landlords with mortgages. Many landlords have calculated that they will have to pay more than 100pc of their profits in tax when the change is fully implemented. Read more on the Daily Telegraph website.

Survey Finds Tax Changes Prompt Landlords to Consider Upping Rents

Changes to the way private landlords are taxed have prompted a majority of landlords to consider pushing up their rents, according to the Residential Landlords Association (RLA). In a survey of landlords, the RLA found that 65% are now considering increasing rents as a direct result of the Budget. The interim findings contradict the Government’s argument that the changes to tax for private landlords would not encourage higher rents, the RLA said. The Chancellor announced earlier this month that Mortgage Interest Relief for residential landlords would be restricted to the basic rate of income tax and landlords will no longer be entitled to an automatic entitlement to a wear and tear allowance for their properties. Read more on the Housing Excellence website.

Mortgage Rate Rise Would Make Buy-To-Let 'Unviable' In 7 Out Of 10 Regions

Britain’s two million buy-to-let investors are already anxious about what tax changes might do to their property holdings under a new government, as even the Conservatives have been less than supportive. But possibly far more threatening  is the risk of a rise in interest rates. In recent years lenders have been focusing attention on buy-to-let, one of the only points of growth in an otherwise stagnant mortgage market. As a result rates have fallen to all-time lows. But this has coincided with a period in which property prices have risen, in general, far faster than rents. As a result, yields have dropped to record lows. It leaves some landlords – particularly those who have bought recently and borrowed the typical maximum of 75pc of the price – vulnerable to even modest rate increases. Read more on the Daily Telegraph website.

How Coalition Has Helped Rich by Hitting Poor

A study of the coalition’s tax and welfare policies reveals how money has been transferred from the poorest to the better off, apparently refuting the chancellor of the exchequer’s claims that the country has been “all in it together”. According to independent research, George Osborne has been engaged in a significant transfer of income from the least well-off half of the population to the more affluent in the past four years. Those with the lowest incomes have been hit hardest. The report also claims that the transfer of funds from the poorest half of the country to the more affluent did not contribute to deficit reduction. It says: “The revenue gains from some tax changes and benefit cuts were offset by the cost of tax reductions, particularly the increase in the income tax personal allowance.” Read more on the Observer website.

Benefits and Tax Changes Amount To 'Speeded-Up Thatcherism'

The Government's welfare benefits and tax changes will widen income inequality between rich and poor on a scale similar to that of Margaret Thatcher, new analysis reveals.  Research for the Fabian Society claims cuts to benefits and tax credits, particularly for working-age families with children, will amount to a “speeded-up replay of Thatcherism”, with inequality increasing twice as fast by 2015 as it did under the former Conservative prime minister.  The poorest families will lose more than 12 per cent of their net income on average, compared to around 3 per cent of net income for households in the ninth decile (the second most wealthy income bracket).  Read more on the Fabian Society website.