Another warning to John Lewis and Lloyds

Last week the tax firm Blick Rothenberg advised John Lewis and Lloyds Bank to stay out of the private rental sector because it may harm their reputations.

Now there’s another warning, this time from the respected publication Moneyweek.

A piece by Matthew Lynn suggests that there may be superficially appealing reasons for non-property companies to get involved, not least because they may have extensive retail and office properties requiring offloading or converting.

In addition, he suggests the current buy to let market - dominated by individual landlords - appears to be in need of professionalisation, which such big name companies could possibly provide.

However, Lynn refers to three “big problems”.

The first is rental yields, which he calls “mostly pitiful.” The second is that capital appreciation - although strong in recent years - may drop now that Britain is outside the EU and so has few migrants demanding homes.

Thirdly, there is what he calls the political backlash for retail firms entering the controversial rental sector.

He writes: “Private buy to let landlords ended up getting so much flak for distorting the market that the chancellor ended up changing the tax rules to drive them out of the market. Why wouldn’t the same happen to corporate landlords? If big companies start making huge profits from renting out homes there will be campaigns for one-off taxes, rent controls, or even nationalisation.”

You can see Lynn’s article in full here.

And here is last week's article on Blick Rothenberg.