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Landlord confidence slumps to 10-year low

24 May 2016

Landlord confidence slumps to 10-year low
Landlords are worried that tax changes aimed at buy to let will make their property businesses unprofitable, according to a new survey.

While 39% of landlords with mortgaged letting property feel the short term prospects for the sector are disappointing, this rises to 48% for those with mortgage-free buy to lets.

The main concerns are new rules that start in April 2017 that restrict mortgage interest relief to 20% for high earning landlords who currently can claim the relief at 40% or 45%.

Another fear is that changes to the way property business profits are calculated that start at the same time will also hit them in the pocket.

The study by market research firm BDRC Continental found 59% of buy to let landlords with up to 12 letting properties felt the tax changes would damage their investments.

This rose to 81% of portfolio landlords – those with 20 or more letting properties.

“There are few happy ever after tales here,” said Mark Long, director at BDRC Continental.

“Many private landlords in Britain are really concerned about the impact of the 2015 Budget when tax relief on private rental properties was cut, and given the housing shortage, the potential knock-on effect on renters and the supply of rental homes is something that we all need to care about.”

Around a third of landlords were looking at trading as a company as a way of avoiding the tax changes, which only apply to individual landlords.

Only 6% of individual landlords and 22% of portfolio landlords have already incorporated.

Despite their concerns about the future, 72%of landlords considered buy to let was a better investment than stocks and shares.

The data also showed the average buy to let landlord has eight letting properties. Most are terraced homes worth a combined £1.3 million.

The annual rent averages £57,000.