The private rental sector in Wales is at risk of contracting next year, warns the Residential Landlords’ Association.
RLA Wales policy officer Daniel Bellis says the lack of incentives for landlords, combined with the three per cent duty surcharge added to the price of a buy to let property, suggests that any investment properties sold off may not be replaced.
Bellis says the implementation of Rent Smart Wales – a tough regime that involves letting agents and landlords undergoing training before being allowed to let property – plus the proposed ban on agency fees levied on tenants, means that landlords face higher costs than before.
To add to the burden, Bellis says, the new Welsh replacement for stamp duty – being introduced next year – offers no respite from the three per cent stamp duty surcharge levied on the full price of investment properties.
The replacement, called Land Transaction Tax, embraces the existing three per cent surcharge and is “potentially devastating for those looking to invest in the family rental market, as the percentage paid on a home over £400,000 will be 10.5 per cent after the additional levy is included” warns Bellis.
“This means fewer landlords investing in properties to provide homes for families, and more difficult for families without a spare £40,000 cash (based on a 10 per cent deposit) who will have fewer choices when it comes to finding that family home” he adds.
He concludes that with no encouragement for investment and a raft of additional costs, storm clouds are gathering and “2018 could be the first year we see a decline in the private rental sector for Wales.”
