Landlords Are Struggling In The New Tax Climate

New research published by the National Landlords Association has revealed that many landlords are struggling to keep their heads above water. NLA research indicates around 79% of landlords are finding it impossible to pay more than the interest in their buy to let mortgages. They say this is down to the rising costs of being a landlord in the current economic climate.

While tenants often assume that landlords are flush with money because they own extra properties, the opposite may well be true. Landlords may have hefty mortgages to service, which take the majority of their rental income. Yes, they are making capital gains in some areas, but with other costs to consider, including housing maintenance, licencing fees, and landlord insurance, operating as a landlord can be an expensive business.

Government Tax Changes

Recent government tax changes have made it even more difficult for landlords. Mortgage interest tax relief is being phased out and will no longer be available by 2021. This has had a significant effect on heavily geared landlords with large mortgage payments.

NLA Says Landlords Need More Time to Adjust

The NLA is calling upon the government to give landlords more time to get used to the new changes in place. They believe there should be at least five years for new policies in the private rental sector to “bed in”. This also gives the government extra time to evaluate whether the new policies are working before they continue introducing any new policies and regulations.

Some critics believe that tax hikes are driving good landlords out of the market, leaving it wide open to rogue landlords who pay no attention to landlord taxes and increased regulatory control. They say that making buy to let unaffordable is putting vulnerable tenants at risk and reducing the quantity of affordable rental housing in the UK.

Fergus Wilson Sells Up

Britain’s largest landlord, Fergus Wilson, certainly agrees. He has just announced that he and his wife will begin a mass eviction program next week, leaving hundreds of tenants homeless by the end of 2019. More than 90 Section 21 notices will be delivered in the coming days, giving tenants two months’ notice to find a new property.

“I do feel sad for people who are going to be homeless, it will be hardest for parents with young children, because most landlords won’t accept them,” he said.

“I also feel sad selling the houses. We have built them up over the years but we can’t take them to the grave with us.”