New research compiled by a firm of international payments experts has labelled the UK as one of the least friendly countries for landlords. A year ago, the UK was #15 on the list. Now it is #25.
Much criticised government reforms such as the abolition of mortgage interest tax relief and extra stamp duty have made it far more difficult for landlords to make a profit. Rental yields have fallen 0.91 percent in a year and landlords in areas where yields are affected by high property prices have been badly affected.
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Government Reforms in the Rental Sector
The government’s efforts to level the playing field between landlords and first-time buyers has caused the rental market to slow down and stagnate. Many less experienced landlords are selling up and only larger landlords with big portfolios are staying put.
Some MPs, including Tory MP, Jacob Rees-Mogg, are concerned that George Osborne’s legacy is having a bad effect on the economy. Rees-Mogg is campaigning to have the extra stamp duty slashed “as a matter of urgency”.
Landlords are Suffering
Landlords with mortgages are also suffering. Some will be pushed into the higher tax bracket and could see all their profits wiped out within five years. This, combined with tighter lending restrictions on portfolio landlords and the spectre of rising interest rates, is making buy to let in the UK deeply unattractive for would-be landlords.
With so many people relying on rental accommodation, landlords provide a vital service, so the fewer landlords there are, the worse the housing shortage.