“The referendum will make no difference” says Michael at Belvoir
Buy-to-let property investors are spending too much time worrying about the effect of the EU referendum on the UK lettings market because – according to national property specialists, Belvoir – there are far more dangerous factors threatening UK housing.
“There are just not enough properties for rent in the UK to satisfy tenant demand – and that fundamental priority will remain unchanged by the referendum,” says Michael Keywood, who owns the Belvoir office on Albert Street in Mansfield.
The number of rental properties throughout the UK has been falling year on year and, nationally, stock figures are currently five per cent down over the same period in 2015.
“The referendum is causing uncertainty both for home buyers looking to buy properties and landlords looking to invest in properties,” says Belvoir’s Managing Director, Dorian Gonsalves, “but this is making no difference to tenant demand which remains extremely strong.”
The real problem, he argues, lies in a poor government strategy that has been worsened by two blunders hitting the number of people buying new properties to rent and the number of landlords investing in more properties.
- The FIRST – was hiking up the rate of stamp duty for buy-to-let investors.
This “government interference in a free market” caused a rush on mortgages, earlier this year, as investors pushed 45,000 purchase deals through before the new rates kicked in and caused a rocketing 163% distortion in buy-to-let mortgage lending.
- And SECOND was the change in mortgage interest tax relief – which delivered a second body blow to landlords and was “totally the wrong strategy” says Dorian Gonsalves.
The result of introducing these added expenses for landlords looks like slowing down the market in the second half of the year and putting a further brake on the number of rented properties available.
Last month Belvoir was advertising 1,994 properties for rent compared with 2,269 at the same time last year. And that 12% drop in Belvoir’s current availability of properties to let is expected to continue – making life more difficult for rent-paying tenants.
“The Government should be incentivising landlords to increase the national housing stock,” says Michael Keywood. “But if you choke off the supply of rented homes then property prices will rise and rents are likely to be forced up by a more aggressive three per cent before the end of the year.”
For the last 20 years landlords have been plugging the gap in the housing market caused by the disappearance of council houses, from 3.5 million to 1.6 million, and the slow growth of new replacement social housing.
And, while the government still fails to address the imbalance, the declining availability of homes for rent is becoming a crisis issue.
“This is the real problem – and one that the EU referendum will not change,” adds Dorian. “We just hope that an aggressive Government plan to build more housing, especially social housing, and serious consideration given to reversing landlord tax changes will undo some of the recent damage to the private rented sector and increase the future supply of rented homes which are desperately needed by 10 million tenants across the UK.”
