Budget changes to increase UK property rents?

Budget changes to increase UK property rents?

Over half of landlords have stated that they’re prepared to raise rents in the face of mortgage tax relief reforms.

Summary:

  • 56% of landlords surveyed in a new poll have stated that they intend to raise their tenants’ rents following changes to the mortgage tax relief announced by George Osborne in the Budget
  • Over half also stated that they do not plan to extend their property portfolio
  • Investing in areas and markets that deliver high yields will safeguard against these changes

Are we about to see rents rise in a number of areas across the UK’s private rented sector?

56% of landlords now intend to increase monthly rental rates for their tenants following changes to the rate of mortgage tax relief, a new poll by letting agents Rentify has found.

Additionally, 57% said they will not be adding to their existing property portfolio, whilst 23% state that they may now look to sell all of their existing rental real estate.

Commenting on the findings, George Spencer, Chief Executive Officer of Rentify, said that “the Chancellor’s cutting of the mortgage interest relief remains a very unwelcome decision and one that could irreparably damage the approach of many buy-to-let landlords and quality of living for their tenants”.

The changes were announced by George Osborne in July’s Budget speech. Previously landlords were able to benefit from tax relief of up to 45% on the interest of their buy-to-let mortgage, but this has now been cut to the basic rate, currently 20%.

Many landlords argue that the relief helps them to offset costs such as letting agent fees, home insurance and council tax, and that these changes will now have a significant impact on their returns, hence why many will be tempted to raise rents.

Investors could focus on buying property in areas and markets with high demand and low supply. This will ensure high yields can help drive overall returns in the face of these changes.

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