Tenants and first-time buyers could be left worse off if the government continues to squeeze the private rental sector, industry leaders have warned.
The warning comes amid reports that the Chancellor is coming under increased pressure to hike taxes on landlords to balance the books. Tax experts have suggested that landlords could be forced to pay National Insurance on rental income at a future fiscal event.
However, speaking at a recent roundtable on the future of the mortgage market hosted by communications consultancy MRM, industry leaders warned further interventions in the private rental sector could harm tenants.
John Davison, Head of Product, Proposition & Distribution at lender Perenna, said: “The more you tax landlords, the more you squeeze them out of the market, which means that rents rise and fewer people can afford to rent. So, ultimately, it’s the tenants that lose out.
“Successive governments have targeted landlords in a bid to raise extra revenue and free up housing stock for first-time buyers. As Chancellor, George Osborne hit landlords with higher rates of stamp duty in 2015 and scrapped tax relief on mortgage interest payments a few years later.
“The current Labour government is pressing ahead with plans to tighten the regulation of the sector, through the Renters’ Rights Bill. It is also looking to force new energy efficiency standards on private rented properties by as early as 2030.”
Meanwhile, Elise Coole, Managing Director of specialist buy-to-let lender Keystone Property Finance, highlighted how increased regulatory scrutiny has accelerated a shift towards professionalisation of the rental market:
“We are seeing more Limited Company landlords and, on the whole, they are the younger generation responding to new market conditions. The limited company is now firmly the structure of choice for younger investors starting out on their journey.”
In October, Sir Keir Starmer drew the ire of the landlord community when he suggested they did not meet the definition of “working people” and therefore would not be immune from future tax rises.
However, despite a “barrage of assaults” on landlords over the last decade, Jeni Browne, Sales Director at broker MFB, said she was confident about the long-term future of the buy-to-let market.
“There was a big influx of buy-to-let landlords in their 30s and 40s after the credit crisis, with more lenient lending parameters at that time. Most are now building up to retirement and now seeing too much hard work, too much regulation and now just want to sell.
“But I do think we’re going to have a new wave of smaller landlords coming back to the table with a clean slate who have their eyes more open to what being a landlord is now. The private rental sector is a fantastic place to be, it offers social security and provides a really important service as well.”
