Landlords have demanded change in today’s budget

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Budget 2018:

Landlords demanded change in today’s Budget, but they won’t be deterred if it fails to emerge, that’s the conclusion of a recent survey by online letting agent UPad.

A review of mortgage interest relief on buy-to-let mortgages, and the removal of the 3% Stamp Duty (SDLT) surcharge top the wish-list of changes that UK private landlords would like to see.

Nevertheless, nonetheless they indicate that they won’t be deterred from the rental market whatever measures Philip Hammond comes up with today.

Despite the good news that tax receipts are strong, and the public sector net borrowing reached a 16 year low (April to August), the Chancellor is under intense pressure to meet the Government’s pledge to increase NHS spending. This is proposed to be £20bn by 2023, so his ability to produce tax giveaways will no doubt be offset by the looming needs of a potential economic shock caused by Brexit – landlords, don’t hold your breath!

The Survey

When asked what one wish the Chancellor could grant on October 29^th, 40% of landlords chose a review of recent changes to Mortgage Interest Relief, whilst over a quarter (26%) would like to see the 3% surcharge on SDLT applied to second and subsequent property purchases reversed.

However, should neither of these come to fruition, the landlords questioned don’t intend to make any rash decisions regarding their future in the market.

Almost a third (29.5%) stated that they’re a committed landlord and take a long-term view on managing their portfolios; a further third (32%) would adopt a ‘wait and see’ approach to better gauge how they might be affected.  Only 7% would take steps to start selling their properties.

These are characteristics that James Davis, CEO of Upad and himself a portfolio landlord, believes are indicative of the level-headed nature of most UK landlords:

“The decision to sell up isn’t instantly achievable and landlords need to factor in serving notice on tenants and possible renovations before tackling all the normal marketing and conveyancing hurdles.  Realistically you can be looking at a twelve-month timeframe to sell a rental property so whatever happens next Monday, we’re unlikely to see that happen quickly.

“Added to that, however, is that our landlords take a long-term performance view of their portfolios.  Over three-quarters of our respondents have been a landlord for more than five years and added to this, the clear majority have a very clear strategic reason for being so: for two-thirds, it’s a vital part of their pension planning, whilst for a fifth it’s their full-time job.  This isn’t something that they’ll simply walk away from.�

It is a position supported by John Socha, a landlord with over twenty years’ experience and a portfolio of 25 properties across Northampton that he’s already planning to expand.  He comments:

“The Chancellor needs to start viewing landlords, like myself, as a legitimate business rather than an activity to dabble in on the side.

“I have built a significant portfolio of properties and already have plans to expand this further, but if the Chancellor doesn’t announce positive moves for landlords, then I will need to start increasing rents as tenancies come to an end.  I’m not going to simply give up what I’ve worked hard to build.�

Upad’s research was conducted shortly after plans to introduce a Capital Gains Tax incentive on the sale of rental properties to sitting tenants of three years or more were first mooted.  Respondents were asked whether this might be a move they’d welcome, with results being somewhat inconclusive.  Whilst 37% agreed that yes this was something that they’d welcome, 33% confirmed that they weren’t looking to sell, so it wouldn’t affect them.

James Davis concludes:

“With 71% of our respondents confirming that they’ll maintain the size of their property portfolio in the coming year and a further 15% stating that they, in fact, plan to increase the number of properties they hold, committed landlords with a long-term, strategic view of their investments are unlikely to be deterred by whatever the Chancellor announces next week.

“They’re keen to maintain a cost-effective approach to managing their portfolios which is why they chose to work with Upad, but they also resent the burdensome nature of the tax regimes inflicted on them.  However, they’re aware of the vital role they play in the provision of homes when supply is so low, and demand is so high, so they remain resolute in their commitment to the Buy to Let market.�

These are the findings of research released today by leading online letting agency, Upad.

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