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Landlords reassess strategies amid rising rental pressures
One of the recent headlines from the research from Pegasus Insight conducted into landlord borrowers’ and their portfolio intentions, was around divestment and whether they have plans to purchase in the immediate future.
Existing landlords and the properties they present to the PRS are vital in going anywhere near to meeting the demand, and will have a direct consequence for rents.
As we’re all aware of, demand has outstripped supply, rents have risen often substantially, and any further cuts to the number of properties available would continue to send rental monthly payments in the same direction. Recently, rents have stabilised slightly, which is good news for tenants, but that could change.
When asked about their portfolio intentions, 40% said they were looking to scale back their lettings activity – the highest figure we’ve ever seen – while only 6% said they were looking to increase the size of their portfolio, which also happens to be the lowest.
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At the same time, nine in 10 of all landlords surveyed said they felt the Labour Government would be negative for landlords, and one wonders if that will shift anytime soon.
However, while these figures could be seen as somewhat alarming, we have to consider timing in all of this. We must bear in mind these landlords were surveyed through September and early October when many will have been wondering just what the Budget had in store for them.
Indeed, there was a growing narrative through that period – which only intensified the closer we got to the Budget – that the new Government were likely to change the CGT taxation rules to move them into line with an individual’s income tax. In other words, landlords would be paying more CGT as a result of selling properties.
However, the Government decided not to make this amendment – instead focusing on raising taxation via property-buying landlords through the stamp duty hike – and, while obviously not a welcome move, in the grand scheme of things we might all think it was preferable to the CGT alternative.
Existing landlord borrowers are clearly a major business opportunity for advisers, and with a considerable amount of business coming up for renewal through 2025, there will be many looking to remortgage to better deals, and where appropriate, to make the most of the equity they have to take the opportunities that do exist to purchase.
Advisers should ensure they are front of mind for those landlords as they seek advice and guidance of what to do next now that the Government has had its say.
*This article was originally published on Mortgage Solutions
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