‘Base rate rise will put landlords and tenants under even more financial strain’

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Landlords have warned the Bank of England that its decision to raise the base rate by a quarter of a percent to 5.25% will only put more pressure on to renters and buy-to-let investors.

Ben Beadle, the chief executive of the National Residential Landlords Association, says: “The Bank of England has warned that the average increase in monthly repayments on buy-to-let mortgages by the end of 2025 will be around £275.

“This comes as some landlords have already seen their mortgage payments increase by almost 240% since December 2021.

“With landlord profits at their lowest level for 16 years, the vast majority are doing all they can to protect tenants from the impact of growing mortgage rates.

“However, without government action, renters face a bleak future as growing costs lead to a loss of more rental homes from the market. 

Properties lost

“Analysis for the NRLA has found that 735,000 rental properties could be lost across the UK if interest rates peaked at 5%. With an average of 20 requests to view each available home to rent already, today’s announcement will only worsen matters.

“The Government must urgently scrap tax changes which have dampened the supply of much-needed private rented accommodation.

“Likewise, it is also crucial that housing benefit rates are unfrozen so that vulnerable tenants receive assistance during this challenging period for the market.”

Beadle’s warning follows data from property firm CBRE today that claims that one in ten rental properties could be lost from the PRS by the end of the year as Government and economic headwinds continue to reduce landlord confidence.

View Full Article: ‘Base rate rise will put landlords and tenants under even more financial strain’

Interest rates highest since April 2008 – property sector reacts

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The Bank of England has implemented its 14th consecutive interest rate hike to address surging prices.

The UK’s interest rate now stands at 5.25%, up by 0.25% from the previous 5%.

The move marks the first time since April 2008 that the base rate has reached this level.

View Full Article: Interest rates highest since April 2008 – property sector reacts

More landlords selling up gives HMRC bumper CGT tax revenue, reveals expert

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Official figures out today revealing a huge increase in capital gains tax paid on residential property sales can be explained by more landlords than usual selling rental homes, it has been claimed.

Wealth management company Quilter says the HMRC figures, which reveal a 15% jump in both capital gains tax paid on property value gains and a 20% increase in the number of taxpayers becoming liable for the tax.

Some 139,000 taxpayers reporting 151,000 disposals of residential property in the 2022/23 tax year amassing a total liability of £1.8 billion, which is much larger than in the 2020/21 tax year.

Quilter says this this data strongly suggests that there is an ongoing exodus of landlords from the property market as the tightening of tax laws on buy-to-lets make them a less attractive investment.

“Coupled with this the continuing high property values but simultaneous threat of a property price crash is seemingly making more landlords opt to sell up,” says Rachael Griffin (main picture), tax and financial planning expert at Quilter.

“How this ultimately impacts the market for all prospective buyers and renters is yet to be seen.

“Currently house prices are slipping slowly but rent remains sky high as renters compete for a dwindling stock of rental properties.”

capital gains

Quilter’s interpretation of the figures is likely to be right – CGT is only payable on second/holiday homes and BTL properties and not paid on ‘primary home’ capital gains..

Griffins says the tax take from CGT is likely to increase given the changes to the Annual Exemption Allowance (AEA) for capital gains tax.

“From £12,300 in the 2022/23 tax year, the AEA reduced dramatically to £6,000 in April 2023 and will further drop to £3,000 from April 2024,” she adds.

“This reduction could significantly boost the CGT take in future years, as taxpayers will have a lower threshold before becoming liable for CGT.”

Read the official stats in full.

View Full Article: More landlords selling up gives HMRC bumper CGT tax revenue, reveals expert

Letting and estate agent complaints ‘remain high’

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The Property Ombudsman (TPO) dealt with 14,000 complaints from landlords and tenants last year about letting agents, it has been revealed.

There were also 1,500 complaints from tenants about a landlord with no agent involved.

And the TPO dealt with more than 3,000 complaints from leaseholders about their managing agent.

View Full Article: Letting and estate agent complaints ‘remain high’

Tenants report surge in landlords increasing rents to pay for higher mortgage costs

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The proportion of renters facing rent hikes to pay for their landlord’s higher mortgage premiums has tripled over the past eight months, it has been claimed.

Generation Rent polled some 1,000 of its supporters to ask if their landlord had passed on their higher mortgage interest payments and 12% said they had, up from 4% in November.

During this period the Bank of England’s base rate has increased from 3% to 5%, with another rise due today.

“A cost of renting crisis is forcing tenants to bear the worst of the economic turmoil right now,” says Ben Twomey, Chief Executive of Generation Rent (pictured).

“While many mortgage holders have yet to see their monthly payments increase, most private renters have already faced a rent hike this past year.

“So far only a minority of landlords have been affected so badly by rising rates that they are passing them on to tenants.

“But the rising cost of rent is a much wider problem caused by the failure to build enough homes where people want to live, and the ability of landlords to raise rents regardless of what their tenant can afford.”

Mortgage rates

But Twomey says rising mortgage interest rates aren’t the biggest driver of rent rises, with rising local rents being a factor for 17% of those polled, along with landlords citing the ‘cost of living’ going up and their need for greater income.

Generation Rent also says the poll suggests 60% of private renters were asked to pay more rent over the past 12 months with some 20% being asked to pay more than £100 extra a month with most accepting the extra payments and 15-20% negotiating the increase down.

Twomey says these figures underline the need for the Government’s Renters (Reform) Bill to be expedited through parliament when MPs return to work in September.

“With many landlords struggling to cover interest rate rises, tenants need protection from unaffordable rent hikes and where landlords need to sell, the government should introduce measures to encourage them to sell with sitting tenants,” he says.

“To make renting more affordable, the government also needs to relink Local Housing Allowance with market rents, and do more to build more homes in the places people want to live.”

View Full Article: Tenants report surge in landlords increasing rents to pay for higher mortgage costs

Electric bikes and scooters in flats?

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Hello, I rent out several 2-bed flats and I’m concerned about the increased fire risk when these devices are recharged in the hallway which is the escape route.

What is the best solution? Should I include a disclaimer in the contract or should I give advice and just say no to recharging in the flat?

View Full Article: Electric bikes and scooters in flats?