Property investors have been urged to use build-to-rent rather than becoming a conventional landlord.
Reece Mennie, managing director of London investment group Hunter Jones, was commenting after Wednesday’s Autumn Budget, which he felt cemented the Labour Party’s image as ‘anti-landlord’.
Mennie said: “Already savvier landlords are exploring other “bricks and mortar” options such as alternative property investments, which has fuelled the huge rise in build to rent, and doesn’t encumber them with such issues as maintenance and tenant management.
“Ultimately these alternative investment models may offer the salvation that landlords and tenants so desperately need, driving the creation of new and affordable housing solutions, while offering a more viable – and profitable – route to property investment.”
In the Budget Chancellor Rachel Reeves decided to increase the stamp duty surcharge from 3% to 5%, though Capital Gains Taxes on property were left alone.
Mennie added: “Anyone with dewy eyed notions that the new Labour government’s first budget would provide a light at the end of the tunnel for the sector will be sadly disappointed.
“Already the raft of measures announced by the housing minister, including landlord licensing rental caps, and the removal of Section 21 no-fault evictions, has stigmatised, whether rightly or wrongly, the government as being “anti-landlord”.
“By increasing stamp duty to 5%, smaller landlords will be hamstrung when they look to expand their portfolio, as they will have to pay more upfront for their investment properties.
“Many who thought that becoming a landlord was a route to financially prosperity may now decide to sell-up, which will only result in further constraints to the supply of rented accommodation, as well as greater rent increases for tenants, which is the exact opposite of the “security and stability” that Rachel Reeves is trying to achieve.”
Inheritance Tax rates will be held until 2030, while Income Tax levels will be frozen until 2028.
Mennie said: “It is clear the private rental sector (PRS) has not been buffeted by… [the] budget but battered. If the so-called “landlord exodus” was not already underway, it has certainly been kickstarted.”
