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Time for government to back our landlords or face a mass exodus – Phillips

by: John Phillips, CEO of Spicerhaart and Just Mortgages
  • 31/01/2024
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Time for government to back our landlords or face a mass exodus – Phillips
Across our branches, we’ve seen firsthand the worrying trend of landlords trimming their portfolios, or even disposing of their properties entirely.

Meanwhile, our letting agents are seeing queues down the road and around the block for a diminishing number of rental properties. What makes it even more concerning is that we’re not alone in seeing and hearing this.  

Yet the one group of people that has seemed to miss all of this is our politicians.  

As we begin this election year, it’s highly likely that housing will once again become a key battleground between the major parties. While the likes of the Tories and Labour are focused on increasing supply, there’s arguably no greater threat to current supply than landlords throwing in the towel. After all, you cannot have a thriving housing market without the support of a buoyant rental sector.  

I’m sure many landlords are wondering, when will those in charge wake up and give some much-needed support to the sector. This should be an urgent priority, no matter who eventually gets the keys to Number 10.  


The weight of tax burdens 

It’s no secret that the tax policy of successive governments towards landlords has removed much of the incentive to not only own, but expand a rental portfolio. Whether it’s the removal of mortgage tax relief, changes to stamp duty and capital gains tax, all these issues and more have hit landlords very hard. 

Of course, all these policy changes have been amplified in the current climate, with landlords seeing much higher operating costs. Mortgage maturity is not only an issue for the residential sector, but for buy-to-let too. Landlords are also coming up to remortgage and facing a similar rate shock – leaving them to make tough decisions.  

Combine this with anti-landlord policy and a huge chunk of the potential yield is gone. You could hardly blame those who take all the risk for turning their backs and putting their money in the bank – especially in the current savers’ climate. 


Not the responsibility of lenders alone 

It is true that the stabilisation of swap rates has enabled lenders to reassess prices and become more competitive. We’ve seen this across the market last year and into 2024, including in the buy-to-let arena. Lower rates of course help affordability, and while an unexpected rise in inflation has set the cat amongst the pigeons, the expectation is we will still see a cut to the base rate this year, if not a number of cuts.  

The hope is that this will then increase the momentum of improvements to mortgage rates. 

However, the government shouldn’t be relying on lenders to do the heavy lifting.  

Whether it’s a potential Labour government or the Conservatives looking to win votes with pre-election gimmes, evaluating the current tax regime feels like a no-brainer. Speaking of pre-election giveaways, the upcoming budget presents a fantastic opportunity for a government lagging behind in the polls and desperate for support to win favour with landlords. When you consider 13 per cent of the Commons and one-in-five Tory MPs are landlords, you’d think support for the sector wouldn’t be so hard to come by. 

Labour has said previously that all tax policy will be up for review if it comes into power. However, it looks set to bring into law its own version of the Renters Reform Bill, with tougher conditions such as the removal of Section 21 non-fault evictions still in play, which many say will make it much harder to remove problem tenants.  

It doesn’t fill many with hope that a Labour government will be pro-landlord. 


Navigating landlord challenges 

So, what is the play if you’re a landlord weighing up your options?  

Unsurprisingly, my advice is to speak to your local mortgage adviser before doing anything drastic. As buy-to-let lenders continue to bring significant rate reductions, that whole of market access can help landlords better understand the lay of the land.  

In addition, all lenders – not just in the buy-to-let field – have risen to the challenge of affordability in different ways. Whether it’s top slicing, variable fees or other innovations, there is still value for landlords in working with an adviser to explore all the options. 

And while property prices have remained resilient, there’s no question that the current climate has generated some investment opportunities for savvy landlords. Speaking of resilience, landlords have needed thick skins and nerves of steel to overcome the deluge of challenges they face.  

Nevertheless, the government shouldn’t rely on this resilience – action is needed urgently, otherwise the much touted ‘mass exodus’ will continue to become a reality, good rental properties will become a rarity and rental prices will only continue in one direction. 

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