Survey shows majority will pass on costs to tenants
Nearly two-thirds of landlords will increase rents if further costs are imposed on them in October’s budget, according to the latest Landlord Trends research from Pegasus Insight.
It found that almost nine in ten landlords (88%) are concerned about the 2% rise in income tax rates applying to rental income from properties held in personal names, an increase of three percentage points since the previous quarter.
They say they cannot absorb such an increase within their businesses, leaving nearly two-thirds (64%) saying they will consider higher rents to recoup their losses. Meanwhile, 83% say that tax and regulatory changes will make them more selective about who they let their property to.
Renters’ Rights Act concerns continue
Implications resulting from the Renters’ Rights Act continue to also dominate their concerns. 91% of landlords say they are ‘very concerned’ about potential court backlogs when seeking to regain possession of a property.
Pegasus Insight’s Tenant Trends show that tenants are also seeing landlords react. More than a quarter expect rents to rise as landlords pass on the cost of complying with the Renters’ Rights Act, compared with just 9% who expect rents to fall.
The research showed that tenants are already paying 11% more than a year earlier at £917 a month. Nearly half (46%) who had been in their property for at least a year had experienced a rent increase during the previous 12 months.
Mark Long, founder and director of Pegasus Insight, said: “Landlords are already preparing for significant change under the Renters’ Rights Act, and the prospect of further tax changes in October’s Budget is adding to the uncertainty facing the sector.
“The growing concern about the courts should also give policymakers pause. The new possession regime will depend heavily on a court system landlords can have confidence in, so ensuring it has the capacity to cope must be a priority.
“The Private Rented Sector needs a period of stability. Further tax increases or additional costs could change landlord behaviour in ways that ultimately affect tenants through higher rents, reduced choice or fewer homes available to rent. The Budget should not add to those pressures.”
