It has been made increasingly difficult for landlords to earn a profit over the last few years. Many have been considering alternatives like holiday lets and even getting out of the property game altogether. Could rental properties be few and far between over the next few years?
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
It has been made increasingly difficult for landlords to earn a profit over the last few years. Many have been considering alternatives like holiday lets and even getting out of the property game altogether. Could rental properties be few and far between over the next few years?
Landlords have faced pressure in recent years due to regulatory and tax changes. So much so that many are contemplating selling their properties – nearly a million landlords, according to Nottingham Building Society. The number planning to sell is far greater than those planning on purchasing more properties.
One fifth (20%) of landlords reported that after reviewing their portfolio, they would sell. Over half (52%) of landlords that are selling cited regulatory issues as the cause. With 24% saying that the end of tax relief on buy-to-let mortgages contributed to their decision to sell.
What’s changed?
In the past, landlords were able to offset mortgage costs against their rental income. But without that incentive and limits placed on Private Residence relief – the reduction of Capital Gains Tax on homes that people rented out after residing in them – being a landlord has become far less attractive.
Even so, 16% of landlords are still planning on buying within the next five years and many are also considering renting out their properties and becoming landlords. The driving force behind this seems to be the low rates on savings (as well as mortgages) and the need to diversify their savings and investment portfolios.
Can we help?
No matter what your plans are for becoming or staying a landlord, you will no doubt have to deal with regulatory and tax implications, so if you’re thinking of making a change to your situation and portfolio, get in touch with us today. We can help you incorporate your property plan into your overall financial strategy, ensuring future growth.
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