Why no news is good news for landlords during the budget

Cat Armstrong from Dynamo for Intermediaries looks ahead to the budget and highlights the importance of 'amateur' landlords within the PRS.

Related topics:  Landlords,  PRS,  Budget
Cat Armstrong | Dynamo for Intermediaries
10th March 2023
Cat Armstrong Dynamo 580
"There is little doubt that professional portfolio landlords have dominated activity levels across the BTL market in recent years"

As I write this, we are just over a week away from a Spring Budget which will have a variety of market sectors, businesses and individuals looking on anxiously in the hope that some form of relief may emerge from a financial perspective.

Thankfully, the outlook for the UK economy in 2023–24 is slightly less bleak than it sometimes appeared over the past six to 12 months. Although, there remains strong pressure on the Government to offer more support to households who continue to struggle under the weight of huge energy bills and spiralling living costs.

For a buy-to-let sector which has suffered more than most in Budget announcements over the past 10 years, expectations of any positive initiatives remain extremely low and, generally speaking, no news tends to be good news for landlords when it comes to any additional Government focus on the buy to let marketplace.

This type of thinking speaks volumes, and in the lead-up to the Budget, it was interesting to see research emerge around the impact of this increased regulatory interference on ‘amateur’ landlords and the wider private rented sector. The report from Octane Capital looked at how a consistent string of legislative changes and challenging market conditions threaten to eradicate non-portfolio landlords.

In the research, it was estimated that 14% of the UK’s buy-to-let landlords are amateur landlords, owning just one rental property. This equates to some 383,600 landlords across the nation, and therefore, the same number of privately rented homes.

Which leads to the question – what impact will it have on the rental market if the amateur landlord falls into extinction?

First and foremost, it would mean that the PRS loses 383,600 of the estimated 2.74m homes currently available across the sector, which would result in a -14% stock reduction. With the estimated average price for a buy-to-let property currently standing at £285,915, losing this many homes would reduce the PRS’s market value by £223.5bn in one fell swoop.

This represents a significant number and it would certainly heap even greater pressure on a private rental supply problem which continues to amplify average rental costs and demand from a tenant perspective. And this would inevitably filter down to those tenants who are already struggling financially.

There is little doubt that professional portfolio landlords have dominated activity levels across the BTL market in recent years as the number of amateur or accidental landlords slowly dwindle due to a combination of tax benefits being taken away, rising interest rates and additional levels of expenditure.

However, such landlords remain vital for the future of a fit and healthy private rented sector and placing any further negative legislative burdens on both amateur and professional landlords will only prove detrimental to a PRS which is already bursting at the seams. There are hundreds of thousands of fingers crossed across the UK that this won’t happen and I’m certainly one of them.

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