Landlords lose confidence in rental sector amid tax fears

Less than a third of landlords are confident that letting out property will be financially viable in the next five years, new data suggests.

The findings by LegalforLandlords also found 40% of landlords planned to raise rents if they face higher taxes in this month’s Budget.

The message from landlords ahead of the Autumn Budget is clear: confidence is low.”

Sim Sekhon, Group Chief Executive of LegalforLandlords (pictured), says: “The message from landlords ahead of the Autumn Budget is clear: confidence is low, and further financial pressure could have consequences for both landlords and tenants.

“Landlords are running businesses and making long-term investment decisions. If the cost of providing rental housing continues to rise, some will look to increase rents where they can, while others may decide that remaining in the sector is no longer financially viable.”

Chancellor John Healey is not expected to raise Capital Gains Tax significantly in his Budget in two weeks’ time, which had been a fear of property owners.

There had been calls from some senior members of the Government to bring Capital Gains Tax rates in line with Income Tax levels, which would have hit landlords looking to sell.

However, just 28% of private landlords are confident that letting property will remain financially worthwhile over the next few years.

Around three out of five landlords are still pessimistic about the upcoming Autumn Budget, with concerns about taxation and the future profitability of the sector weighing heavily on confidence.

The findings suggest that further financial pressure on landlords could prompt some landlords – 16% – to leave the private rented sector altogether.

Landlords call for tax cuts to restore confidence and support with rental supply, with 30% favouring a reduction in Income Tax on rental income and 27% backing lower Capital Gains Tax. A further 25% say tax relief would help increase the supply of private rented homes.