Blundered to death by the Budget: the plight of private landlords.
Is Chancellor George Osborne trying to kill off small private landlords? He’d already stuck the knife in by pre-releasing news of the extra 3% stamp duty levy on second property purchases but I feel the knife was well and truly twisted with the introduction of the Lifetime Isa.
I’ll start with a thought about the future supply of landlords. Those under 40 will be eyeing up the Lifetime Isa. It’s meant to be an alternative to pensions – easier to understand, not shrouded in complexity and devoid of too much red tape. But, intentionally or not, the Lifetime Isa might just tempt some would-be landlords away from buy-to-let towards traditional cash saving. The Government bonuses alone can equal a 5% return – matching or surpassing many rental yields today (and that’s without any interest paid too).
Let’s return to the here and now. As the dust settles on Chancellor George Osborne’s latest delivery, it is existing landlords who have gone off to scratch their heads the most. No doubt headlines will return to the BREXIT debate but for many, the only ‘In’ or ‘Out’ vote that matters is whether to stay in the private rental sector as a landlord or not.
Before the Budget 2016, Michael Ball – a professor of urban and property economics at Henley Business School at the University of Reading – wrote in the business news paper City AM of the struggles facing landlords in the immediate and long-term future. The triple whammy of increased stamp duty costs, cuts to mortgage interest relief and alterations to the wear and tear tax break is expected to bring many small scale landlords to their knees. While Ball called for the Chancellor to introduce better tax breaks for landlords, George Osborne instead confirmed the new stamp duty levy and ploughed ahead with his vision for homeownership with the very rewarding Lifetime Isa, designed to help first-time-buyers save for a deposit.
So where does this leave landlords? The one-man band investor who is trying to provide for his retirement? The accidental landlord who was left a property in a will but now enjoys renting it out? The small scale investor making a go of buy-to-let?
The figures make grim reading. The National Landlords Association (NLA) report that the proportion of landlords in Central London who intend to sell property has quadrupled since 2015’s Budget. A year on we can add in the threat of REITs and Build to Rent – both of which will herald the arrival of ‘branded’ landlords, offering shiny new rentals, furniture packs, on-site facilities and a rosy community lifestyle.
The squeeze is from all sides. Returns are being eroded away by higher taxes and less generous offsetting. Rising property prices in many areas are curtailing the growth of portfolios for some landlords – compounded by the new second home stamp duty tax. For many, it’s the increasing number of laws and legislations that leaves them asking ‘Is it worth it?’ – the Right to Rent checks perhaps the tipping point. And then there’s BREXIT – filling the country with uncertainty and giving some landlords the jitters.
As an industry we need to be the private landlords’ cheerleader. We need to position landlords favorably in an increasingly competitive market. We need to help landlords stack up their figures so the returns are positive. We need to define the USPs and start promoting our existing landlords as the appealing option. As agents and managers, we need to up our game.
Simon Duce is the Managing Director of ARPM Outsourced Lettings Support, part of ARPM Group – supplier to the property and investment industry of property management and relocation services.
You May Also Enjoy
Latest Halifax house price data shows a 1.3% increase
Halifax House Price Index February 2026
These are London’s most imbalanced housing markets
First-time buyer reform could reshape conveyancing risk landscape
Property Redress reports Complaint enquiries rise 47%
