Mortgage broker Lee Grandin has questioned the assertion from landlord associations that rents are bound to rise due to the upcoming tax changes to buy-to-let.
After the Cherie Blair-led landlord group lost their court challenge against mortgage tax relief changes earlier this month Richard Lambert, chief executive of the National Landlords Association (NLA), said: “Tenants who will see their rents rise as a consequence of the changes to landlord taxation.”
And on Tuesday David Cox, managing director of the Association of Residential Letting Agents, said continued adoption of the 3% stamp duty surcharge will “lead to increased rent prices through a fall in supply and increasing demand”.
But with March research from the NLA showing that 19% of landlords intend to sell their properties Grandin, owner of brokerage Landlord Mortgages and B2B platform Lend2Landlord, reckoned these predictions don’t stack up.
He said: “Landlords may increase rents but I think this will be short-lived.
“The NLA said ‘If landlords follow through with their intentions over the coming months this could lead to a massive sale of property’.
“It is a simple matter of supply and demand: If you get a sudden a supply of property from smaller landlord’s off-loading properties that will lower the selling prices.
“Any purchasing landlord will take into account the new tax rules and work out what the property is worth based on current rents that are achievable; they will be transacted on the basis of the lower net yields as a result of the tax changes.
“The purchasing landlords will be better placed to hold the lower net yield long-term thus squeezing existing smaller landlords further.
“The only respite will be if first-time buyers take up the slack but with four years of landlord squeezing ahead I doubt they will rush in.”