Property investors have been the target of many recent tax changes and may feel unfairly targeted at a time when they are facing potential Covid-related tax hikes to pay for the pandemic, and yet almost half of those who invest in the private rented sector remain optimistic going into 2021.
Despite the challenges of the coronavirus, almost half – 45% – of landlords say they are currently optimistic about the buy-to-let market, according to a new survey released today by Property Master.
The online buy-to-let mortgage broker found that less than a third – 29% – of those surveyed were pessimistic about the buy-to-let market, despite fears that the chancellor Rishi Sunak could increase taxes for those with additional homes, as part of the government’s attempts to claw back the cost of extra spending during the coronavirus pandemic.
Mortgage interest relief changes, the scrapping of the ‘wear and tear’ allowance and the introduction of the 3% stamp duty surcharge have hit landlords’ profits over the past few of years, which partly explains why so many people are exiting the BTL market and thus reducing the supply of much needed private rented stock.
Tax and regulation changes continue to have a negative impact on the buy-to-let market, with a number of landlords selling properties with a view to reducing their portfolio, or exiting the market altogether.
But despite the concern that yet another proposed tax hike could see buy-to-let landlords exiting the market in droves before it is introduced, just 10% of the landlords surveyed by Property Master planned to exit the buy-to-let market in 2021 and almost 70% said they were not about to sell any of their properties in the new year.
Angus Stewart, Property Master’s chief executive, said: “For landlords, as for many other sectors, 2020 is a year that brought plenty of challenges. But in the case of landlords Coronavirus and the resulting economic uncertainty came on the back of a raft of regulatory and tax changes over recent years that have left the sector battered and which saw smaller landlords in their thousands throw in the towel.”
Stewart continued: “However, our survey shows the buy to let sector as a whole is a resilient one. Those landlords that have survived may well be stronger and our survey shows them as giving buy to let the thumbs up as we move into 2021.
“We see the year as being one of two halves. There is clearly continued turbulence forecast for the first half of the year as coronavirus and Brexit play out. But the fundamentals of the private rented sector remain and now more than ever an increased number of people need a good quality roof over their heads, and this will create plenty of opportunity for landlords to do well.”
The number of landlords surveyed by Property Master who planned to add to their portfolio in the new year was evenly split with those who had decided in 2021 to stick with their existing property portfolio.
Almost 43% of landlords said they planned to buy more property in 2021 and the same number planned to stick with the properties they already had. Almost 13% were undecided.
In terms of buy to let mortgage rates, landlords seemed more relaxed about the outlook although many commentators have recorded an increase in rates in recent months.
Almost 54% of landlords surveyed thought that buy to let mortgage rates would stay the same as opposed to almost 38% who thought they would increase further. Just under nine per cent thought rates would decrease despite the rumours about a possible negative Bank of England base rate.
Stewart added: “A competitive and innovative buy-to-let mortgage market has proved to be a big plus for the private rented sector. Inevitably, the coronavirus has led to some caution amongst lenders especially around loan to value ratios, but we see this as easing as the year plays out.”
Perhaps the title should have been more than half of the market is PESSIMISTIC as 55% of landlords were not confident and only 45% are optimistic. Talk of the number of landlords selling up and getting out is also distorted as at the moment Government have effectively stopped this from happening with its punative actions against landlords with massively extended notice periods to gain possession – to protect tenants or perhaps protect themselves from the exodus they have encouraged through ongoing Landlord Bashing or maybe even preventing sales before they can screw further taxes out of the sector? Believe what you want we live in an era of confusion marketing.
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Well said, Will.
The hadline suggests that landlords are generally optimistic which is very misleading and encourages government and councils to tighten the screws even more. Your amendment would be more accurate.
With the help of God, a fair wind and fingers crossed my tenant vacates at the end of the month and I can exchange contracts. There is nowhere or them to go so the council is putting them in temporary accommodation. Very short-sighted actions by the councils and government is leading to more homelessness.
They need to work with landlords, not Shelter (who don’t), Generation Rent (can’t work, won’t work) or Acorn (just add weedkiller) and help us provide accommodation. Before they all scream at me, I have not raised the rent in eight years, perhaps lulling the tenant into a false sense of security since local rents are now some £100-£200 higher.
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Just lots of idiot LL who clearly haven’t got a clue as to the coming s### storm coming to the PRS. No way would I ever invest in a tenanted property. A normal resi with lodgers I would. It just proves how unaware so many LL are about issues in the PRS. Those LL not having a mortgage to service can gamble on rent defaulting tenants and evicting them. But they are only 50% of the PRS. 50% is therefore at massive risk from rent defaulting tenants. Do these dopey LL not understand the risks? Or do they imagine that they are so good at the job that they will never face an eviction of a rent defaulting tenant!? A LL has to get tenant selection correct EVERYTIME. IF not then bankruptcy could easily occur. Are many of these dopey LL aware of these risks. I think NOT!
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Some landlords are but many are not. Property advisers used to be professionals pre 1980’s but many now are not in the sales orientated business world we are now in. Truth and honesty are rare commodities. Believe no one and research everything thoroughly. Take no notice of adverts, so called wealth generation schemes and avoid anything you see or read on social media: is a good starting point. Then decide at least you can’t blame others if you get it wrong. Most of all NEVER trust any politician.
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