Are you a Landlord or a tennant?
Landlords in London and across the country are coming under more pressure due to extra taxes heaped on them by the government, as it aims to help people get on the property ladder with their first homes. Not only that, but tenants are being hit, too.
That’s the view of leading economist and former Bank of England policy official David Miles, who said blaming the rental market for the UK’s ongoing housing woes was short-sighted and “profoundly wrongheaded”.
Miles said: “One response, and in some ways, it has been perhaps the most significant housing policy response in recent years, is to point one’s finger at the rental sector and say, well it is kind of their fault.”
Additional stamp duty and a newly introduced measure to incrementally reduce tax deductions on interest payments to zero per cent over three years would only result in landlords hiking up rents to cover their losses and tenants would end up worse off. It is a policy that would ultimately backfire on the government, Miles warned.
Landlords’ Heavy Burdens
Many landlords in London and elsewhere are reeling under the double whammy of more taxes and lower rents. This is eating into their operational budgets and overall profits and forcing some to exit the sector altogether. Added to this is the ongoing uncertainty that Brexit is causing, and that’s causing some foreign tenants to pack up and leave the UK over fears they may not be able to have residency and work permission here after the two-year divorce talks with the EU conclude.
The government is all too aware that many in the younger generations are struggling to get first homes. Enormous rises in the value of properties in recent decades (up 151 per cent since 1996), coupled with real earnings that unsurprisingly have not kept pace with the ballooning prices, means that today, young people simply cannot afford to buy a flat or house.
Their prospects of snaring their first home appear, indeed, grim. By some estimates, young couples including such professionals as nurses, firefighters and others may have to go on renting properties until they are well into their 60s. It is believed that around 1.2m people in England are stuck on waiting lists for houses and another six million who are renting are experiencing housing insecurity and feel they will never be able to purchase their own home.
Landlords Getting Creative
But, for people who are renting and perhaps saving up for a deposit for their own home, there is some good news. Landlords’ old ways of operating are largely now a thing of the past. Just giving tenants the keys and more or less forgetting about them, unless they fail to pay the rent, is a strategy that rarely appears nowadays. Today’s modern landlords are getting creative to ensure the occupants of their properties are satisfied, stay long-term and keep on paying.
This can often end up being good for the landlord, too, as it results in less work to do on their properties, a guarantee of suitable tenants and a steady stream of rental revenues collected by someone on their behalf. It’s why more London landlords than ever are choosing to hand over the running of their property portfolios to a letting agent. Now, services from a landlord agent in London W6, for example, will help to take the headache out of operating properties while saving cash.
As for the immediate future in the UK’s housing and overall property sector, Miles added, it is not optimistic that prices are likely to fall rather, he predicts, they will continue to rise.
“Are houses going to become more affordable relative to incomes? I’m not sure that is the most likely outcome.”