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What can private landlords expect under a Labour Government?
With a new government now in place, it’s fair to say that landlords are anticipating potential changes that could impact their investments. So, here at Foundation Home Loans, we sought to understand landlords' expectations through our Q2 2024 Landlord Trends report, conducted by Pegasus Insight.
This found that landlords are primarily concerned about three areas: tax reforms, retaining Section 21 evictions, and avoiding costly regulatory changes. These concerns reflect the challenges and opportunities landlords see under the new administration.
Taxation remains a significant issue, with recent changes such as the phased reduction of mortgage interest tax relief impacting landlords' profitability. One landlord expressed frustration about “paying tax on profits that don’t exist.” There is a strong desire to simplify the regulatory environment, as excessive regulations increase costs, which are often passed on to tenants. This highlights the need for a balanced approach to ensure sustainability in the rental market.
The ability to evict tenants using Section 21 notices was cited as another critical concern. Landlords argue that retaining this tool is essential for managing risk and maintaining flexibility. One landlord noted the importance of “easier eviction processes for tenants who refuse to pay rent.” Removing Section 21 could increase risks and discourage investment in the rental sector. Landlords also advocate for “faster court hearings for existing problems” to streamline processes and reduce the burden on both landlords and the judicial system.
Another key issue is the potential introduction of minimum EPC levels for PRS properties. While many landlords have already been working to improve their properties' energy efficiency, there are concerns about the cost of mandatory upgrades. To help combat this, we have recently introduced new EPC Saver products in partnership with Vibrant Energy Matters, offering support to landlords wishing to enhance energy efficiency, including a bespoke report and £1,000 cashback for necessary improvements.
Overall, landlords are nervous about future requirements. They desire a return to previous levels of mortgage interest tax relief, a reduction in stamp duty surcharge, and an end to costly upgrades. However, these changes seem unlikely.
The fact is that overall cost and responsibilities of being a landlord are unlikely to diminish soon, requiring careful planning and adjustment to new policies. Meaning that mortgage intermediaries have a crucial role in helping landlords navigate these changes, ensuring effective management of their investments.
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