10 November 2019
If you are a buy to let landlord you may be concerned about how unpopular you are with the UK politicians.
The Conservative party have brought in new tax laws to increase the tax you pay, like the restriction on interest relief and the extra 3% stamp duty land tax charge. The Labour party are proposing a right to buy for tenants which will result in discounts being given on the market value of the properties when the tenants buy. The Liberal Democrats want to regulate the sector and cap rent increases, with a longer termination period before tenants leave.
The politicians are blaming the increase in property prices with the fact that people now struggle to get on the housing ladder on buy to let landlords. But is this the case? More significantly we have a shortage of housing and must ask why this is. The public want developers to build more houses on brown field sites but the cost of cleaning the site can be significant, so the developers want a higher price to allow them to make a profit. I have seen developers start projects on brown field sites with very little profit, unless the price of the house increased while they were completing the development. Luckily these were successful but carried significantly greater risk.
Therefore, politicians should be looking to assist developers to clean up these brown field sites which will become economical to develop. We do need to see our towns and cities with less disused industrial sites.
Yes, some developers make a substantial profit, but these tend to be building on green field sites and most of the houses that they build are not sold to private landlords as they usually buy flats in towns and cities. Encouraging developers to develop brown field sites is key. Private buy to let landlords assist such developers by providing a market to be able to sell the properties they have developed. The tenants tend to be looking to move out of the towns or cities at a later stage, maybe when they have children or when they retire. Politicians should be looking at how to solve the overall shortage of housing rather than attacking one sector of the overall housing market.
If you have any queries or would like to discuss this topic further, please contact your local UHY adviser.
