Today we sat down with Steven Bletsoe (pictured), operations manager for Wales for the National Residential Landlords Association (NRLA), to talk about upcoming regulation, landlords exiting the sector, affordability and what brokers can do to support their landlord customers.
The Buy To Let Market Forum kicks off on 19 April in Bolton with events also taking place in Worcester, Cardiff and West Sussex.
To register for the event and find out more follow this link.
Q: What is the most significant regulation coming down the line for buy-to-let sector? Is it positive or negative?
A: Without doubt the most significant regulation coming is the Welsh Government Green and White Paper on “Fair Rents and a Right to Adequate Housing” which is a part of the working agreement between Plaid Cymru and the Labour administration.
The NRLA has a “seat” on the working group for these papers and are representing the views of landlords in Wales. Our research into the matter shows that rent controls don’t work and we will be doing everything possible to put reasonable and responsible information forward to stop this “working agreement” from further driving private landlords out of the market.
Q: The Levelling Up, Housing and Communities committee has called for the government to review tax changes in BTL market, do you think that will happen and is it a good idea?
A: The NRLA has called for ending the stamp duty levy on additional homes where the property is adding to the net supply of housing. This includes bringing empty homes back into use, converting commercial buildings to residential, developing new properties or converting larger properties into smaller, more affordable rental properties.
Ending the Land Transaction Tax (Wales’ version of stamp duty) levy on buy-to-let properties and working with local authorities on a more holistic approach to council tax premiums on empty homes to help bring them back into use.
Reducing the capital gains tax (CGT) rate for the sale of residential properties so that landlords are not put off from selling properties to tenants. Scrapping the changes to mortgage interest relief (MIR). Whether these happen is down to politicians and the ideology they hold and their loyalty to the party they are elected to represent, we will have to wait and see what happens next in the elections that are due in just over 18 months
Q: Do you think more landlords will exit the market due to tax changes? Or will landlords see opportunity?
A: This will depend on the landlord’s own set-up. The landlords who own properties in their own name face significant incentives to sell up, especially given the current interest rates. However, landlords who own via their limited company can still offset their mortgage interest against tax.
However, probably the biggest factor at the moment is the impact of the Renting Homes (Wales) Act. Many landlords are concerned about the effect of this regulation, leading to a loss of confidence for future investments and a greater chance of market exit.
Q: Affordability is a challenge for landlords, what would be on the NRLA’s wishlist?
A: Improving the supply of the right houses in the right places and quickly. We have already given evidence to the Welsh government homelessness enquiry that the UK needs almost 230,000 new private rented homes a year to meet government housing targets across the UK. This was in a report by the economics consultancy Capital Economics.
A supply of rental properties that matches demand contains price increases without the need for artificial legislation that will be counterproductive. It will allow the market to influence the prices accordingly and fairly for all parties. The NRLA has long maintained the need to increase the supply which at present is not serving the demand.
Q: How can brokers best support landlords at the moment?
A: Brokers need to ensure that their clients are fully informed of the new obligations under Renting Homes (Wales) Act and the pitfalls of failure to adhere to the Fit For Human Habitation (FFHH) regulation that could see tenants withhold rent if a property does not meet the legal definitions of what a FFHH property is.
Say you bought a property for £20,000 under market value, you stillneed to know the costs are to ensure that you are even able to rent it out and start to receive rental income. The best support a broker can give a client is to encourage them to join the NRLA and gain access to all of the support we offer. You never know, there could always be introductory commissions to be earnt from such an introduction.
