The head of MartinCo, the country’s largest franchise agency group, says the government’s buy to let tax changes and lettings fee proposals do not significantly impact the fundamental drivers which will lead to rental sector expansion.
Ian Wilson, in a trading statement to the City, says the fundamental drivers for expansion of the private rented sector remain in place - high net migration, a restricted supply of new housing stock, affordability and deposit hurdles for first time buyers, and pension reform unlocking investment funds for over-55 year olds.
MartinCo says total returns from buy to let investment over the past decade have outperformed most other asset classes and the prospect of owning a privately rented property to generate income in retirement and benefit from rising capital values remains attractive.
It says that a total tenant fee ban in Scotland in 2012 was successfully overcome by the Group, winning market share at the expense of smaller, less financially stable letting businesses, many of whom withdrew from the market.
“We do not envisage the government’s recent interventions in the buy to let sector significantly impacting our business. Buy-to-let investors have generally reduced gearing in their portfolios over the years since 2008 and are believed to be able to absorb rising interest rates” says Wilson.
“We are well positioned to sell investment properties if investors decide to exit, and our research suggests that larger buy to let investors would purchase this stock. Early indications from the mortgage industry show that investors are beginning to incorporate their activities into trading companies to avoid the stamp duty surcharge and to retain the benefit of interest tax relief on buy to let loans” he adds.
He says he remains positive about the MartinCo core lettings business which provides 74 per cent of his group’s franchise royalty income.