New laws could make landlords hike up London rents


London landlords could be forced to sell their rental property or hike up rents, a study has found.

Half (51 per cent) of landlords in London could sell and 49 per cent said they will increase rents due to financial pressure from new laws being introduced by the government.

Looming increases in the Bank of England base rate, rising stamp duty for property owners, the tenant fees ban and loss of tax relief on buy-to-let properties will all contribute to the pressure.

Alexandra Morris, managing director at online letting agent MakeUrMove, said: “The worst-case scenario will be a housing market crash if landlords default on their mortgage payments or decide to cut their losses.

“The government are currently sleep walking into this crisis. The alarm bells should be ringing, and this should be a major concern for both homeowners and the government.

“The government needs to act now to ensure it remains financially viable for landlords to meet their financial obligations.

These rent rises could affect the 898,000 tenants in the capital, according to MakeUrMove.

Nearly half (47 per cent) of London landlords have only one property, letting it out as a secondary, rather than primary income.

This could be why 98 per cent of the region’s landlords say they would have to sell if they were making a loss, breaking even or not making enough profit.

The average monthly rent in London stands at £1,274, and this could be set to rise even further for just under half of the capital’s tenants if costs continue to climb for landlords.

Despite the cost implications, 38 per cent of London landlords aim to keep rents the same, taking a hit to their bottom line, rather than passing rising costs on to tenants, recognising that many tenants can ill-afford rent increases.

“Despite there being plenty of good landlords out there who want to keep the impact to their tenants minimal, the reality of the situation is that once the upcoming legislative changes come into effect, many landlords will find this unaffordable and may be forced to increase rents regardless,” Ms Morris added.

“The government is supposedly bringing in this legislation to protect tenants, but the unintended consequence will likely be landlords having to increase rents, especially if they are forced into debt on their rental property. And this is the best-case scenario. In reality it could be much worse.”

MakeUrMove worked with 3Gem Research to survey 1,000 landlords about their views.



Source : http://www.yourlocalguardian.co.uk/news/16143484.New_laws_could_make_landlords_hike_up_London_rents/?ref=rss

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