There was recent research conducted by the National Landlord’s Association (NLA) which revealed that as many as 20% of its membership base have a plan to sell a number of properties in their portfolio. This is the highest level of planned property sales in the membership in a decade.
There is a firm belief that the main reason for these planned sales is the recent changes in the tax laws according to the NLA. The NLA has produced a video series which fully explains the impact of these tax changes on both landlords and tenants.
What is in these Videos?
There are four NLA videos created based upon research conducted by Capital Economics. The videos show that both tenants and landlords will pay over the odds in taxes as a direct result of the Government changes to the taxation laws. These initiatives were implemented by the Government as a way of curbing activity in the buy to let market.
The measures introduced by the Government were:
- The scrapping of mortgage tax relief for additional rate and higher rate tax payers
- Additional property purchases attract an a 3% surcharge
- Tenants paying upfront letting fees is now banned
Video one is named “Taxing Homes” and is an overview of how the buy to let sector will shape up after the Government measures have taken hold. “Hitting Landlords Hardest” is video two and here there is a case study on the tax amounts that four different people pay that earn £50,000 per year. The landlord in the case study pays the most tax.
Video three – “What does this mean for landlords” – views the private rented sector from the perspective of a landlord. There is some advice in the video on how landlords should handle the changes.
Video four – “What does this mean for households” – takes a tenant’s perspective and shows how they will certainly be paying more in rent and the number of rental properties available will be a lot fewer.
Why were the Videos created?
It was the intention of the NLA in creating the videos to inform their members of the complexities involved in the three Government changes. They also wanted to take the perspective of both the landlord and the tenant.
They are trying to lobby the Government to take a fresh look at how these changes are affecting the private rental sector. They have done their own research and are using the research provided by Capital Economics.
Richard Lambert is the CEO of the NLA. He has said that there is an increasing number of people that totally rely on the private rental sector for a home to live in. This means that there is a responsibility on landlords to ensure that they provide the very best homes. The landlords also need a good incentive to provide these homes which means a reasonable ROI.
Lambert went on to say that he believed that the changes made by the Government have undermined the viability of many of their member’s businesses. There are few incentives now for landlords to invest in new properties in order to make a good return.