Landlords in the UK are expressing concerns despite the robust performance of the private rented sector (PRS).
- A recent study by Pegasus Insight indicates over 90% of landlords feel the Labour Government’s policies will adversely affect them.
- Key concerns include potential changes to Capital Gains Tax (CGT) and policy reforms like rent caps and mandatory licensing.
- Many landlords are contemplating reducing their investment in the sector, with a significant number planning to sell properties.
- Despite tenant demand and strong rental yields, landlords remain wary of future reforms and financial pressures.
In a revealing study conducted by Pegasus Insight, it was found that more than 90% of landlords harbour apprehensions regarding the Labour Government’s impact on their investment interests. Their concerns are predominantly centred around proposed tax hikes, anti-landlord measures, and a perceived erosion of autonomy over property management. Such sentiments persist despite the private rented sector demonstrating robust performance fundamentals, with tenant demand remaining strong.
Among the significant worries, changes to Capital Gains Tax (CGT) were highlighted by 85% of landlords, reflecting the fear of increased tax burdens. Additionally, the introduction of rent caps, the abolition of Section 21 no-fault evictions, and the implementation of mandatory landlord licensing are causing unease. Energy performance standards, demanding properties to achieve an EPC Band C rating, further exacerbate landlord concerns, with 51% citing this as an issue.
The potential alterations to CGT alone could drive 39% of landlords to cease further investments, escalating to 48% among those possessing four or more buy-to-let properties. Moreover, almost 20% of landlords surveyed intend to quit the market entirely, while a further 16% may sell some properties and 21% would contemplate such actions in the wake of adverse policy changes.
Interestingly, despite these apprehensions, 79% of landlords acknowledge the strong demand for rental properties, with average rental yields at a 10-year high of 6.5%. Nevertheless, only 6% plan to expand their portfolios in the immediate future, with 41% planning to offload properties in the upcoming year.
Landlords with existing buy-to-let mortgages show a greater inclination towards selling, with 46% indicating intentions to divest, compared to 34% of outright owners. For those with extensive property holdings, specifically landlords managing 20 or more units, 59% are contemplating downsizing due to anticipated rental reform impacts and a general lack of confidence in the PRS.
Despite the overall sentiment of pessimism, Mark Long, the founder and director of Pegasus Insight, emphasised the vitality of the PRS to the nation’s housing needs. He warns that increased CGT could lead to immediate rent hikes and a constriction of supply in the PRS, exacerbating the already delicate balance between supply and demand. The imminent budget announcements are critically awaited, offering hope for a more supportive governmental stance towards landlords.
The outlook among landlords remains cautious, driven by regulatory uncertainties despite strong market fundamentals.
