If you’re a Tenant …
The Bank of England say that the change will not adversely affect rents and we think this is completely wrong. Many Landlords will now be forced to raise rents because when interest rates rise they’ll need extra income just to break even – note that that isn’t to make any profit, it’s just to break even and cover the extra tax burden. A survey done by Rentify shows that 56% of Landlords intend to increase rents as a result of the proposed change and another by the Residential Landlords Association had a finding of 65%. We think that as the reality of the change hits the sector, the actual figures will be much higher.
We also think that the condition of rented properties will fall as there just won’t be the money to maintain them. Local Government, Charities and good Landlords have worked hard over the years to raise standards but will now see their work undone.
Unfortunately this is the ‘best case’ scenario that we see. As interest rates go up it may be impossible to increase rents high enough to meet the problem and Landlords will be forced to sell up, therefore evicting tenants. The vast majority of Landlords are good hard-working people and this situation fills them with dread, but the Chancellor’s change on mortgage tax relief is going to present them with no choice whatsoever.
Facing homelessness, tenants will be looking for alternative accommodation in a shrinking sector.
There is simply not enough social housing to cope with the enormous demand in this country and without the Private Rented Sector Councils will be forced to put families into Bed & Breakfast accommodation. Unfortunately budgets are being slashed so despite their obligation to house families this may become completely impossible.
However it is also important to show a balanced view in what is the first attack the Chancellor has made on the Private Rented Sector (there may be more to come). Currently this change in taxation only affects Landlords, or specifically the properties, that have a mortgage on them and are owned by the Landlord as an individual or couple.
If you’re worried about the effects of the Chancellor’s tax change on your rented home please write to your local MP to ask him/her to support you.