ACCORDING to the National Landlords Association (NLA) landlords are losing confidence in the Private Rented Sector (PRS) with many planing to sell part or all of their portfolios, removing 136.000 properties from the rental stock.
In total, the NLA is saying 1-million properties will be sold off in the next five years as landlords exit the sector due to unfavourable tax conditions. The net reduction is only 136,000, presumably as corporates or high net worth individuals step in and buy up big swathes of property as they are unaffected by the tax changes.
Confidence levels are at 43%, which are 5% lower than levels recorded after the financial crisis of 2007.
A reduction in supply of landlord stock of 136,000 against the background of slow housebuilding lagging behind demand, hard to get mortgage products thanks to the mortgage market review, a rising population and Councils unable to offer social housing paints a bleak picture for the UK.
We can realistically expect more people being forced on to the streets as Councils simply cannot cope with demand for housing and have a reduced PRS to turn to that cannot help. And the solutions that are available will be expensive to access, so emergency accommodation that today costs £50 per night may well cost £100 per night or more in five years time as PRS landlords look to offset the tax costs or B&B businesses stick the arm in.
That extra cost will in turn have to be met by Councils, not the central Government, so as well as having more people sleeping homeless, we can expect Council charges to rise as they try desperately to meet demand for housing but fail due to years of no investment and selling assets.
Homeowners will be scarcely better off. The affordable housing the Government is touting is ripe for big corporate investment to turn into high-price rentals. That’s made all the easier as mortgages remain difficult to access and interest rates are expected to rise as well.
The best hope for the UK housing sector right now is the judicial review being spearheaded by Cherie Blair that could force a U-Turn on the turnover tax on the grounds it is anti-competitive behaviour and against individuals’ human rights. She claims a reasonable chance for success, which means it will be down to the judge on the day and we can all hope and pray they are a landlord themselves.
The Property Insurer