Majority of landlords taking action ahead of tax relief changes
There appears to have been a “modest improvement” in optimism among landlords, according to Paragon Mortgages, as they start to formulate their response ahead of the upcoming changes to tax relief.
Of the landlords surveyed 22% are now more optimistic as they get used to last year’s increase in stamp duty and come to terms with the forthcoming changes in tax relief.
Although the majority of landlords (65%) felt no change in sentiment, 12% said that, compared with three months ago, they are now more pessimistic. It was promising to note that this figure is down from 18% three months ago.
58% of landlords confirmed that they had either already taken, or are making plans to take, action ahead of the tax relief changes. This coincides with an increasing awareness about the implications of the tax relief changes, which is good news considering that they are due to be phased in from April 2017.
Of the landlords that have already taken action the most common action was to increase the rent charged to cover some or all of the increased cost (24%). Others plan to maintain their current properties but not buy any more (21%) and to sell some of their properties and not buy any more (16%).
More landlords are looking to purchase property in the next quarter (13%) which is up from 11% in Q3 2016. Whilst the figures remain some way off their peak, the improvement is welcome. There was also a reducing number of landlords looking to sell (17%), which is down from the 21% three months ago.
It will probably come as no surprise to learn that tenant demand remains high, with 94% of landlords describing the market as stable or growing, and fewer than one in 30 suggesting a decline. However, the average Tenant void period remains unchanged at 2.7 weeks.
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.
Post courtesy of Property Reporter.