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Is the Government Completely Anti the Private Rented Sector?

Any landlord or property investor who has watched and listened closely to the budgets over the last few years and keeps up to date with the 400+ rules and regulations, will feel that the good work done in looking after tenants properly isn’t being appreciated by the Government much, if at all. 

Increased costs through initiatives such as Right to Rent, new prescribed information such as the How to Rent Guide (that has to be issued to be able to have any chance of evicting a tenant), plus important improvements, despite the cost, such as fitting smoke and carbon monoxide alarms are tough enough to fund when, despite rents increasing at the moment, they don’t typically increase in line with the cost of living over time. 

And while landlords’ costs are on the up, the Government is reducing earnings further by taking away tax relief such as the wear and tear allowance and financial relief for higher rate earners. 

However, this time around it was lettings agents rather than landlords who were in the firing line. They announced that letting agents would not be allowed to charge upfront letting fees to agents, with the expectation that costs will be pushed onto landlords. This is a little harsh considering only back in May 2015 letting agents had to invest a small, now potentially wasted, fortune making sure their fees were advertised and given to tenants (and landlords) prior to working with them.

But it’s not all doom and gloom. For those who have invested wisely over time, it is always possible to make good money from property and buy to let – and it will be in the future too. 

What it’s worth taking out of the Government’s Autumn Statement is this: 

1. Wages won’t be as squeezed by inflation increases due to extra personal allowance relief and a rise in the minimum wage;

2. Investment in infrastructure means opportunities for canny landlords and investors.

The reason these two factors are good news for landlords and investors is that putting up rents in 2017 while the cost of living is expected to rise at a similar rate to wage rises (on average) would have made it harder to implement rent rises to combat increasing costs and potentially reduced profits. However, with the personal tax allowance rise from £11,000 to £11,500 and the rise in the minimum wage from £7.20 to £7.50 in April, some tenants will be able to cope with the increases. 

In addition - and probably the most important aspect of the Autumn Statement - is the investment in infrastructure and transport. For example, the newly accepted report about the Cambridge, Milton Keynes and Oxford corridor includes a plan for an East to West rail link and the ‘Oxford-Cambridge Expressway’. This type of initiative could be a great opportunity for investors – as long as the right local advice is taken and the impact hasn’t already been priced in.

 

So overall, it’s a shame that the good landlords and agents in the PRS continue to be undervalued and penalised for poor levels of housing stock which they aren’t responsible for but, if you look carefully enough, there are and always will be some good ways to make money from property. 

 

For further information call: Michael Lawlor on 02083431777 or

Email: Michael.lawlor@mab.org.uk