The rental market is coming under fire from the UK government – what impact will it have on rental prices, and by inference, the tenant?
Are you a landlord who has a number of rental properties. Are you looking to purchase a house from national home buyers to let it out? You might even perhaps be someone who is looking for a place to rent. There are many different scenarios. Is it still financially viable to purchase a property and let it out? Can first-time buyers enter the housing market? There is no easy answer to this question.
According to an article on the International Business Times website, Martin Totty, chief executive of HomeLet stated that: “While demand for rental property remains strong, landlords always have to be mindful of tenants’ ability to pay higher prices… the data suggests we have now begun to approach an affordability ceiling, particularly in areas of the country where rental price inflation was previously highest.”
Rental properties: easy to purchase, rental price dilemma
The continued demand for rental properties and the cheap mortgages ensure that people will enter the own-to-let market. Even though the mortgage rates are low, the house prices are very high; thus, making it difficult for first-time buyers to purchase their own homes. This, in turn, drives the demand for rental properties.
Landlords who are already in the rental market are able to purchase more houses to let out; however, the UK government has decided to increase the taxes on the buy-to-let market, leaving property owners to ponder whether to absorb the costs or to increase the rental prices. They have to bear in mind that there is a limit to how much of an increase the lessee will be able to pay. It makes sense that property owners increase the rent to mitigate the cost of these tax increases; however, there is also evidence that the rental price market is slowing down which implies that the tenant will not be able to pay sustained price increases.
These tax increases have also made it difficult for the ad hoc landlord to stay in the market as there is now an abundance of new regulations and legislation to comply with. Actually, all landlords are going to have to comply with the new legislation. It is expected that these new taxes and regulations will make it difficult for the “informal landlord” to stay in the rental market. There is also the added challenge of understanding the new intricate legislation. It goes without saying that this process can take up a lot of time, and money if you have to consult with a tax and legal expert.
Most landlords have very little free time as the day-to-day management of rental properties takes up a fair amount of time. The good news is that https://homelet.co.uk/ offers comprehensive landlord insurance which takes care of all of your landlord insurance, emergency assistance, and protection cover allowing peace of mind when it comes to the holistic management of your properties.