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Rent caps could deter quality landlords

Sarah Davidson

September 27, 2014

She added that buy-to-let investors still have a tough task making healthy returns courtesy of low wage increases and rents only rising in line with inflation.

Faulkner said: “The danger is with Labour’s talks of introducing ‘rent caps’, rather than helping tenants, they could be enhancing the income of individual landlords at the expense of tenants and be scaring off good quality, long time institutional investors who can provide quality long term rents!

“Currently rents are moving upwards, but in the main it’s only in line with inflation. So from a landlord’s perspective, in real terms, they are no better off.

“Ideally if wages were rising, as they should be, with inflation, neither would tenants be either.

“However, for many tenants who have been in a property long term, their rents aren’t increasing at all.”

Homelet recorded a 7.8% year-on-year rental price increase to August 2014, while Spareroom saw a monthly increase from £546 in July to £563 in August.

Faulkner added: “Yields for new investors are going to be tough to make ends meet when interest rates rise, so it’s essential buy-to-let investors seek expert mortgage advice and factor in mortgage rates of 5-7% seen before the crash.

“For long-term buy-to-let investors, property price rises are good news as this is the main way to earn money from buy-to-let versus other investments and as they bought some time ago at lower prices, their yield will be unaffected.”


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