Landlords fear the government is cracking down on investment in new rental homes. Credit: Christopher Furlong/Getty Images
The government's approach to landlords, including sweeping rent reforms and recent tax hikes, will 'diminish' the attractiveness of rental properties and could cause some to leave, according to an official assessment. from this sector.
The impact of the housing department Michael Gove's assessment of the Tenants' Bill (Reform) states that the legislation will incur additional costs for landlords, some or all of which could be passed on to tenants in the form of a higher rent.
This appears to confirm landlords' fears that government measures, including legislation, could discourage investment in new rental homes, and is likely to add to the fears of some Conservative MPs who have accused the government of looking ” anti-landlord.” /p>
Industry data says the bill, which includes repealing Section 21 “no-fault” evictions, is pushing more landlords to exit the sector as they also suffer from rising interest rates.
An impact assessment by Mr. Gove's Leveling and Housing Department states: “Landlords are likely to offset some of the costs of regulation through rent increases, although there is a possibility that some may be tempted to leave the PRS [private rental sector]. if they cannot recover some of the costs incurred through rent increases.
“The extent to which this happens depends on the income of the tenants and the overall demand in the sector.”
Landlord profits fall below 4 %
The impact assessment claims the measures would cost landlords as little as £17 per year per rental property, or 0.2 per cent of the average annual rent in England, which would be mitigated by incentives of up to £17.
< p>But it adds: “The decision of whether to invest in the private rental sector or stay in it … depends on the relative attractiveness (financial return) of rental housing compared to other investment opportunities such as government bonds, bank deposits and pension annuities.
“Additional costs in the leased sector would reduce the relative attractiveness, other things being equal, compared to other investment opportunities. However, given the low cost to landlords as a result of the legislation, we do not expect the effect to be significant.
“In addition, other external factors, including changes in interest rates and changes in taxes, may likely have a much greater impact on the supply of real estate, given their financial implications.”
Last year, the National Landlords Association (NRLA) accused Chancellor Jeremy Hunt in an “effective further tax hike” for landlords when he lowered the annual capital gains tax threshold from £12,300 to £6,000 from April 2023.
Ben Beadle, chief executive of the NRLA, said at the time: “All of this will discourage investment in new rental homes, which the country desperately needs, and drive up rental costs.”
Tenant bill introduced in Parliament in May, bans fixed-term leases and introduces sliding contracts in the private rental sector. It will also provide tenants with new pet rights.
The impact assessment says the law is needed because “many tenants face insecurity and housing quality that is detrimental to health, well-being, educational attainment, productivity and the ability of families to put down roots and invest in their local communities.”
It states that “no-fault” evictions are “costly… exacerbating affordability problems for private tenants” and adds: “Frequent, costly moves undermine tenants' ability to pay living expenses and save on home ownership.”< /p>
A spokesman for the Department of Equalization, Housing and Communities said the bill would provide “a better deal for tenants and landlords,” adding: “We prohibit no-fault evictions under section 21 so that tenants have more security in their homes and making it easier for landlords to get rid of anti-social tenants.
“The impact assessment shows that the net cost of our reforms to landlords is minimal. The assessment also clearly shows that this is unlikely to lead to landlords leaving the sector and improve the quality of housing in general.”
Recent Comments