Rental market continues to rise despite former Chancellor’s BTL market attack

Rents in the UK’s private rented sector (PRS) increased by 1.3 per cent in the 12 months, despite George Osborne’s assault including the Stamp Duty premium and the change in the tax treatment of mortgage interest.

The assault on buy-to-let investors by George Osborne was always going to reduce the supply of rental properties. The change in tax treatment of mortgage interest, Stamp Duty premium, alongside other measures investors will only be too aware of.

These measures deployed by the former chancellor have continued to bleed into the current workings of the rental market; continuing to off-put many landlords and property investors at first glance.

Yet by penalising buy-to-let investors, this tactic came as an inimical move as public housing continues to wither away; homeownership continues to be well out of the reach for the many whilst the renting continues to grow as a life for many, particularly towards larger cities such as Manchester.

The latest monthly residential market survey from RICS (Royal Institution of Chartered Surveyors) demonstrates the effect caused. A tight rental market is resulting in higher rental figures, with rental growth continuing to strengthen over the coming months and also poses the highest figure on average since 2016. Much of this however originates from reduced stock on the rental market, as many landlords and buy-to-let investors continue to offload their properties due to the tightening grip from the Government. Landlord instructions have now declined for 13 successive quarters.

There are many recent factors to consider in the offloading of investment properties, most notably the Tenant Fee Ban. Furthermore, even when looking at mortgages, there has been a 3.6% fall in approvals for buy-to-let investors between January to June 2019. Of all mortgages approved in June, only 8% of approvals comprised of ones for buy-to-let investors.

So as a result, the reduction in stock is causing strain on the lettings market. Demand remains the same in many areas with plenty of growth (particularly in Manchester) across others. The concern now lies that a lack of new investors mean stock will only continue to reduce, continuing to put a strain on the market and make it more difficult for prospective tenants. 

As a result, the rental market over the coming months is likely to see further landlords make swift exits, leaving fewer landlords with less stock and increasing spiralling rental figures. 

Simon Rubinsohn, chief economist at RICS, has commented: “The lettings market data continues to send a very strong message that institutions need to upscale their build-to-rent pipeline, to address the shortfall resulting from the decline in appetite from BTL investors. It is significant that the near-term rental expectations indicator has climbed to a three-year high.”

It is plain to see therefore that the current situation has arisen because of a former Tory chancellor’s decision to attack the BTL sector with a series of damaging tax and regulatory changes. There’s no doubting that reversing some of these would be an ideal method of preventing landlords from exiting the rental market, encouraging others to return whilst also inviting new ones to help with the supply.

What this means for you as a landlord or property investor however is down your persistence. Whilst we recognise the Government are continuing to make your life harder, it need not be.

Through our efficient, effective and transparent full property management, your investment or portfolio will draw you the highest results whilst you will be advised and positioned to ensure total compliance; effectively rendering the Government’s attacks on you as minor.

For more information on how we can help, give us a call on 0161 883 2525.


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