Buy-to-let mortgages taken out by landlord investors fell by almost a fifth in June this year compared to last year, a reaction to the tax changes which are being implemented from April 2017-2018 to April 2020-21. To further curb new property purchases relating to buy to let and second homes, a 3% increase in stamp duty in 2016 for landlord buyers was added to the mix, making it harder for landlords to see a profit.
The Royal Institute for Chartered Surveyors (RICS) has warned that the lack of landlords as a consequence of the clampdown has resulted in a reduction in the number of lettings available. Simon Rubinsohn, RICS Chief Economist, said “The impact of recent and ongoing tax changes is clearly having a material impact on the buy to let sector as intended. The risk, as we have highlighted previously, is that a reduced pipeline of supply will gradually feed through into higher rents in the absence of either a significant uplift in the build to rent programme or government funded social housing”.
RICS expects that the lack of supply of rental properties, which is “evident in virtually all parts of the country”, will mean a rise in rents by almost 2% this year, with predictions of that rising to 15% by the middle of 2023.
If you are a landlord and need any guidance on what these tax changes could mean for you, get in touch by calling 01244 400315 or emailing [email protected].