Landlords raising rents

Experts are forecasting a 4% rise in rents outside of London in 2017, driven by less availability of rental stock resulting from buy-to-let tax relief changes in April.

Rents are set to increase by at least 4% outside of the capital, as a reduction in the supply of rental stock puts upwards price pressure for tenants.

Mortgage interest relief for residential buy-to-let properties is set to be reduced to the base income tax rate, which is 20%. It is due to be phased in over a four-year period starting from April. Landlords are currently able to claim tax relief on the top rate of tax of up to 45%. The changes mean landlords will no longer be able to deduct mortgage interest payments or any other finance-related costs from their turnover before declaring their taxable income.

Property experts have warned that this could force landlords to sell up, reducing the available rental stock.

So, If the tax changes being phased in from this April lead to even fewer buy-to-let purchases and some landlords deciding to sell, then a tightening of supply in some areas will lead to increasing rents. Property experts forecast that asking rents could rise by 4% outside London by the end of 2017, though in London prices are likely to stay flat.

There is little doubt this year will be one of caution for buy-to-let investors due to tighter lending criteria and increased stamp duty. The market definitely won’t see the spike in first quarter purchases that we saw last year as landlords rushed to buy before last April’s new stamp duty deadline.

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