Property News

Number Of Landlords Selling Up Rises By Nearly 13% In Four Months

Number Of Landlords Selling Up Rises By Nearly 13% In Four Months

The number of landlords selling up has risen by nearly 13% in four months, Sky News has learned.

The statistics, given to us by the estate agents trade body Propertymark, show an increase from July to October.

Why should we care what happens to landlords?

In basic terms, if the landlord exodus continues we could end up with a housing crisis on our hands.

That is mainly because we have, as a country, become over-reliant on the private rental sector.

"Generation rent" is no longer your stereotypical "twenty-something" professional.

Now it's made up, increasingly, of older generations, even pensioners, alongside a rising number of "social" tenants.

Government figures show more than 25% of households renting privately are in receipt of housing benefits.

That is, quite simply, because we do not have enough social housing.

As a result we are seeing different "groups" of people converging, and all competing for the same space within the rental sector.

A lack of affordable housing is, at the same time, exerting pressure from another direction.

Despite a housing market dip with property prices falling, many households aspiring to own their own property are unable to save up.

Mission impossible

Yoana Miteva, a British citizen who moved from Bulgaria to England twelve years ago, describes it as "mission impossible".

She has been working full time, even taking on a second job, to try to put money aside.

Rent rises have meant added financial pressure forcing her to move home, in addition to energy bills, the cost of living, and house price inflation overall,

Tearful, she tells me she feels "like a hamster in a wheel…running and running, I'm trying to run faster, taking a second and third job, and I'm still well behind".

As more landlords leave, rents rise as demand further outstrips supply.

The main reasons for landlords selling are down to mortgage rate rises and government legislation.

Private rented sector 'invisibly buckling' under pressure

Nathan Emerson, CEO of Propertymark, describes the private rented sector as "invisibly buckling" under increasing pressure for a while.

He says if the sector doesn't work for a landlord "they will simply sell, meaning there's one less home for a tenant".

Landlords themselves are asking for the government to step in and change the rules to help make it easier to create "viable" businesses.

Sean Gillespie, a landlord in Hull, says his colleagues are "jumping ship" because their rented properties are financially "unsustainable".

He asks: "How can landlords survive? They survive by putting rents up."

Government rules blamed for tax increases

Government rules are being blamed, specifically "Section 24", for tax increases which mean it's no longer possible to offset business costs.

Mr Gillespie says it is "absolutely destroying" the sector.

"We can't change the interest rates at the moment," he adds, "but we can repeal Section 24 which is the increased taxation since 2015... if landlords don't make any money, they can't run a business, can't provide housing, can't repair houses."

They may be generally unpopular, often vilified, but we need landlords.

If they disappear in increasing numbers, the question remains, without enough social or affordable housing - where will people live?

 

Landlords will 'rush' to sell after tax crackdown

Investors and owners of second homes pay £2,600 more after capital gains tax-exempt allowance cut

Investors, second-home owners and landlords will have to pay thousands of pounds more tax when the tax-exempt allowance on capital gains is reduced.

The crackdown on holiday home owners and landlords is likely to initiate a race to sell up before the thresholds start to fall next year, analysts warned.

Stock market investors will also be liable for more tax when they sell shares not held in an Isa. The point at which capital gains are taxed will be cut from £12,300 to £6,000 in April and then to £3,000 from April 2024.

The overhaul means that, ultimately, second-property owners will pay £2,600 more tax.

Chris Etherington, of RSM accountants, said: "It could result in a rush of people looking to accelerate sales of assets to benefit from the current exemption levels.

"Any individuals with assets standing at a modest gain should give serious consideration to accelerating a sale before the exemption is sliced."

The change means that anyone selling property that is not their main residence will have to pay thousands of pounds in extra tax on their profits - and thousands more property owners will have to pay the tax.

A second-home owner selling up after April 2024 will have to pay an extra £2,604 in capital gains tax, assuming their taxable profits exceed £12,300.

If they sell up in the 2023-24 tax year, they will have to pay an extra £1,764 compared with today.

These calculations are based on higher-rate taxpayers. Capital gains tax is paid on the sale profits on second homes and buy-to-let properties. On residential property, higher-rate taxpayers are charged at 28 per cent, while basic-rate taxpayers pay 18 per cent.

For a basic-rate taxpayer, the cuts in the tax-free allowance mean a second home owner will have to pay an extra £1,134 in the next tax year, or an extra £1,674 after April 2024.

Hundreds of thousands of people will be affected. Wealth manager Quilter said 323,000 people paid capital gains tax in the most recent tax year, and would be liable to pay more in tax once the allowance is cut.

These calculations do not account for the deduction of allowable costs, such as improvement works, over the course of ownership.

Capital gains tax on the disposal of business assets or shares is taxed at 20% for higher-rate taxpayers. The cut in threshold from April 2024 means investors selling these taxable assets will face an extra charge of £1,860.

But Jeremy Hunt, the Chancellor, stopped short of bringing capital gains tax rates in line with income tax rates - a recommendation made by the Office of Tax Simplification in 2020 that would have triggered far larger jumps in bills.

Tom Bill, of Knight Frank estate agents, said that stopping short of bringing capital gains tax in line with income tax rates had prevented a mass fall in demand from property investors.

But the change in the tax-free allowance will hit owners of cheaper properties, because the tax-free allowance would have made up a larger share of their taxable gains, Mr Bill said. He added: "It will disproportionately affect landlords of lower-value properties."

Paul Barham, of tax firm Mazars, said many middle-class savers with modest portfolios would be forced to pay the tax for the first time.

He said: "The capital gains tax annual exemption allows for those who make modest gains on investments to do so without losing any of the growth realised to tax.

"The announcement of a gradual reduction in this allowance from £12,300 to £6,000 and then to £3,000 will mean that even the most modest of gains could become taxable.

"Those with much more sizable investment portfolios, and existing business owners, will also be affected but the marginal impact will be more keenly felt by those with smaller investment portfolios."