Landlords brace for further buy to let actions in Budget

Minimum tenancy terms, action on houses in multiple occupation (HMOs) and multi-unit blocks (MUBs), and individual licensing for all landlords and their properties were the areas those landlords felt were most likely to see government intervention.

Just over a third of landlords who expected political moves predicted the introduction of a rental cap.

Perhaps unsurprisingly, 77 per cent were not in favour of such a move, 12 per cent might be in favour, two per cent definitely supported such a measure while nine per cent did not know.

When asked what action they would take should any cap on rents be introduced, 35 per cent said they would immediately increase all rents to the maximum rent allowable.

One in three would consider selling some of their portfolio, 20 per cent did not know what they would do, 19 per cent would either look at leaving the sector or at other assets and 10 per cent would do nothing.

S21 fears

Despite the expectation of intervention, landlords are still undecided on the current Conservative government, perhaps waiting for the Budget next week to make their minds up.

Landlords with larger properties were more likely to be positive about the current government, with reasons for positivity including more certainty on Brexit, the Labour Party defeat and Conservatives being traditionally more ‘friendly’ to landlords.

In contrast, negativity was raised over the abolition of no-fault S21 evictions, increased legislation, or the prospect of anti-landlord policies being introduced.

The issue of abolishing S21 evictions was a major concern with 53 per cent of landlords saying they would feel less confident about their portfolios and 30 per cent would feel slightly less confident. A third said they would be unlikely to buy any further properties, a similar number would consider exiting the sector, and 31 per cent would consider reducing the size of their portfolios.

Optimism despite uncertainty

BVA BDRC quizzed 791 landlords on behalf of Foundation Home Loans.

Foundation noted there was a greater degree of landlord optimism than in previous iterations of the research and 25 per cent of landlords reported tenant demand up from the last quarter.

Those investors with 11 or more properties were much more positive on rental yields and the financial market as a whole, while those with more than six properties were much more positive about their own letting business.

Foundation Home Loans director of marketing Jeff Knight (pictured) noted landlords were resigned to the introduction of minimum tenancy terms, further action with regards to HMOs and MUBs and individual licensing.

“There is definitely a degree of uncertainty around what might be coming next, and I suspect many landlords are waiting for this month’s Budget before they make up their minds more fully on whether this is a government which will be more friendly to landlords,” he said.

“Of those who think there will be intervention, 32 per cent think stamp duty for landlords is likely to go up from its three per cent extra charge level, as opposed to the seven per cent who think a cut is likely.

“In that sense, landlords appear to be bracing themselves for a Budget which may not be in their favour, rather than one which seeks to roll-back on the measures which have undoubtedly impacted on their profitability over the last few years,” he added.