The lender’s latest Private Rented Sector Trends report polled 200 landlords and found 58% have already taken, or are making plans to take, action ahead of the roll out of the tax relief changes in April.
Of those, 24% have increased rents, 21% plan to maintain their current properties but not by any more and 16% plan to sell some of their stock.
The report showed, however, that sentiment is improving among landlords, despite the turbulence of the last few years with 22% of landlords now more optimistic about the market. The percentage of landlords feeling more pessimistic compared with three months ago was down to 12% from 18%. The majority (65%) reported no change in sentiment.
John Heron, managing director, Paragon Mortgages, said: “We’ve reached a critical time for landlords looking to plan ahead and this is reflected in the Q4 report. It’s clear that landlords’ understanding of the changes has improved and that more landlords are developing a clear strategy to address the impact of the changes.
“However, despite increasing optimism, we must remain cautious. The changes have not started to be implemented yet and the full impact will not be felt for many years. Whilst it is predictable that landlords will seek to increase rents in response to higher costs this clearly will not be good news for tenants, particularly those that are already struggling to save for a deposit.”
David Smith, policy director of the Residential Landlord’s Association, said it called on the government to scrap the tax relief changes in next month’s Budget.
He said: “Since the mortgage interest relief changes were first announced we have been telling the Treasury that these changes would have a serious impact on landlords and that they would ultimately end up hurting tenants. The evidence for this has continued to mount and this is yet another reminder that the tax rises will lead to higher rents and less supply.
“The government has admitted that it has had an unexpected windfall from its Stamp Duty surcharge on additional properties. We are calling on the Chancellor to use this in his budget to scrap the planned mortgage interest changes or at least apply it only to new borrowing.”