In Q1 2015 BDRC Continental’s Landlords Panel research indicated that the Tories could count on electoral support from the majority of private landlords (57%). The Labour party’s pre-election policy announcements had reduced their backing to just 9%.
However, in the July Budget, Chancellor Osborne made a series of policy announcements which may well have levelled the playing field considerably.
In addition to adjustments to ‘wear and tear’ allowances on furnished rental properties, the Chancellor capped the amount that landlords can claim in buy-to-let mortgage interest tax relief. Not all landlords borrow, but the vast majority (77%) do. One third are higher rate tax-payers, the group most affected by the new rules being phased in from 2017. To say that reaction is negative would be a huge understatement.
Our latest findings show that:
- 75% of 1,700 landlords polled labelled the announcements as ‘mainly bad news’ for the private rental sector, primarily driven by the loss of mortgage interest tax relief
- 1 in 4 told us they will sell some or all of their properties as a result
- 6 in 10 will increase rents to recover lost income
- 30% will decrease the amount spent on property upkeep to lessen the financial impact
- 75% of buy-to-let landlords will make some kind of change to their mortgage borrowing – mortgage balance reductions were mentioned most frequently
For lenders and tenants alike, the consequences of the 2015 budget are likely to be felt more acutely over the coming months and years. Our Q3 Landlords Panel survey took place some eight weeks after the budget, time enough for the policies to have been absorbed and well understood. Combined, they have acted to drag landlord confidence from a record high in Q2, pre-election, to levels not seen since the dark days of 2008. Not what George intended I’m sure.
