Alan Bevan, managing director of leading Liverpool property agency City Residential, said new measures to protect tenants could push investors out of the buy-to-let sector. Tony McDonough reports
Residential landlords face “tough times’ as new legislation puts the squeeze on the sector and one Liverpool expert warns it could lead to higher rents and fewer homes available.
Alan Bevan, managing director of leading Liverpool property agency City Residential, said new measures introduced, and further changes proposed, to protect the rights of tenants are putting a severe squeeze on buy-to-let investors.
Measures such as the gradual removal of tax relief on mortgage interest, new stamp duty rates on additional properties, the roll-out of local authority licensing schemes and the proposed fee ban all make life tougher for landlords, he added.
And, earlier this week, it was revealed the Government is considering banning ‘no fault’ evictions ushering in an era of ‘open-ended’ tenancies. This is on top of even tougher new energy efficiency standards.
Hot potato
The residential sector has become a “political hot potato’, Mr Bevan said, with the risk that some investors will pull out of the sector potentially leading to a shortage of rental properties and higher rents.
He explained: “The financial impact of the government’s ‘interference’ on the private rental sector has been extremely pronounced… Although some of these changes are positive, and will help improve the rental sector, it will place more responsibility on landlords.
“As the general property market slows more focus has been placed on the net income buy to let properties generate rather than any capital growth. In the absence of capital growth – or growth being no more than inflation – landlords are being forced to reevaluate their portfolios to ensure that they are making a profit on their investment.”
Attractive investment
Mr Bevan insists that the continuing low interest rate environment meant buy-to-let was still an attractive investment proposition, but added that legislative and taxation changes have convinced many landlords to sell up and move out of the sector.
He said: “This will naturally decrease the amount of rental stock available to rent which may well have two effects – an increase in rents and tenants less likely to vacate their existing property.
“Landlords have the ‘comfort’ of continued low interest rates. Given the challenges surrounding Brexit and a slowing economy it is unlikely interest rates are going to rise in the short/medium term thereby keeping financing costs low in relation to rising rents.”