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News: Landlords plan to raise rents after UK buy-to-let changes

Wed, 06 Jan 16

The new year’s resolution for many landlords in 2016 will be to raise rents, following changes introduced by the UK government at the end of last year.

45 per cent of landlords are planning to raise their rents in 2016, according to a survey carried out by flat-share site, SpareRoom.co.uk. Almost one in five are planning inflation-busting hikes of more than 3 per cent.

The most common reason landlords cite (38 per cent) is the additional costs incurred by the new government legislation unveiled by Chancellor George Osborne at the end of 2015. Measures to bring what the government perceives as a risky sector under control include cuts to tax relief for both mortgage interest and wear and tear and an additional stamp duty charge for second home buyers. With the previously planned roll-out of the Right to Rent immigration checks also set to weigh on landlords’ budgets, the costs of these new regulations are expected to be felt by tenants as well as landlords.

"Buy to let looks like far more of a risk than it did at the start of the year," says Matt Hutchinson, director of SpareRoom.co.uk. "The worry is that tenants will bear the brunt of these changes."

The survey follows good news for tenants in the final months of last year, with the number of tenants experiencing rent increases continuing to fall, according to the Association of Residential Letting Agents, with less than one quarter (23 per cent) of letting agents reporting rent increases for tenants in November, down from 25 per cent in October – and the lowest this year.

The seasonal cheer, though, is predicted to be short-lived, with letting agents also pessimistic about the impact of the new government measures. Two in five expect supply will decrease over the next five years, placing pressure on the homes that are available to rent, further driving up rents.

"The issue of supply and demand in the rental market will be increasingly pushed to its limit," says David Cox, ARLA Managing Director.

"We urge the Government to re-think its proposals around reducing Mortgage Interest Relief, scrapping the Wear and Tear Allowance and hiking up Stamp Duty by three per cent on buy-to-let properties. Whilst these remain, the Government’s goal of increasing the percentage of people in home ownership is getting further out of reach."

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