Two thirds of landlords plan to raise rents to cope with recent tax increases on the PRS according to a major new survey by the Residential Landlords Association (RLA). The survey also found that the same proportion are not planning on expanding their portfolio.
Nearly a third of landlords are considering leaving the market altogether. This is despite predictions that one million new homes to rent will be needed by 2021 and evidence showing that institutional investors in the rental market are not delivering the homes needed.
With the majority of landlords, a total of 56%, planning to increase rents in the next 12 months to offset the impact of changes to mortgage interest relief, the policy will most negatively impact families, with 63% of landlords reporting letting to tenants with at least one child.
There are also likely to be cutbacks in raising the standard of existing properties with 58% saying the tax rises will hit their plans for investment in their properties.
Recent tax changes have included restricting the payment of mortgage interest relief to the basic rate of income tax, an extra three percentage points stamp duty on the purchase of homes to rent and taxing landlords’ income and not their profit. The majority of landlords, 54%, do not have confidence in the future of the sector with 70%, anticipating further government policies aimed at landlords in the near future.
The RLA is calling on the new Chancellor to review the tax changes made by his predecessor and get behind the nation’s landlords and encourage more homes to be developed for rent to meet the demand.
Commenting on the survey, the RLA Policy Director, David Smith, said: “These results show how perverse recent tax changes have been. By implementing policy that will increase rents and choke off the supply of homes to rent, the Government is making it more difficult for tenants to save for a home of their own. We are calling on the Chancellor to use the Autumn Statement to hit the reset button.”