Landlords have been warned that cutting property maintenance budgets as a way of coping with reduced cash flow could jeopardise their ability to rent out properties and puts renters at risk.
Propertymark’s latest report, The Impact of Section 24 on Buy-to-Let Landlords, reveals just how damaging taxation has been to the private rental sector by hindering investment and contributing to rising rents. It says landlords are shouldering higher taxes, with many only just breaking even or losing money.
However, squeezed maintenance budgets have direct consequences with the potential to adversely affect tenants, according to Propertymark, which says small, relatively minor unattended repairs might become large and costly repairs in the future, potentially causing dangerous conditions. “For tenants, there is the possibility of suboptimal conditions in a sector, which is already lambasted for poor conditions in some parts.”
While an ageing landlord cohort, concerns about upcoming legislation and the availability of better investments elsewhere contribute to the mix, Section 24 is a key decision-making factor for buy-to-let landlords, says Propertymark. It wants the government to cut taxes on extra properties and capital gains tax thresholds, to promote long-term investment in the private rented sector.
The Renters Rights Bill - expected to be introduced in the Commons later this week – is set to abolish section 21 no fault evictions, as well as introducing longer eviction notice period for tenants, which could prompt even more landlords to consider quitting. It’s thought ministers will seek to enact the ban immediately after the bill becomes law, rather than waiting to check whether the court system can cope with more cases.
NRLA chief executive Ben Beadle (right) says plans to reform the PRS have been on the table for more than five years. He adds: “Above all, renters and landlords need certainty about what the future looks like. Whilst we await the precise details of the Bill, it is vital that it works and is fair to both tenants and landlords.”
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