Landlords competing with first-time buyers for affordable homes

With some landlords looking to sell off cheaper properties in the year ahead, there could be more opportunities ahead for first-time buyers as well as buy-to-let investors looking for well-priced property.

The National Landlords Association (NLA) conducted its quarterly poll in April which found that 380,000 landlords – representing 19% of the total 1,043 respondents – are planning on selling a rental property in the coming year. Of these, almost half (45%) are owners of apartments or flats, which are typically the cheapest type of property available, while 33% have terraced homes they are considering selling.

This is significant for first-time buyers, indicating that an influx of affordable homes may soon by coming to the market, while buy-to-let landlords looking to invest or expand their portfolios could also benefit.

Less rental homes available

However, with only 7% of respondents saying that they specifically hoped to sell their properties to other landlords, there might be some competition in the market between first-time buyers and landlords looking to snap up the homes as they come onto the market.

While the figures are good news for those looking to buy, it may also spell increased competition for renters if less homes become available to let due to landlords selling up, as pointed out by the NLA’s CEO Richard Lambert.

“These findings sound like positive news for potential new homeowners, but the reality is not everyone wants, or is in a position financially, to buy.”

“In fact, if all these homes are sold as planned then it will lead to a significant fall in the supply of property available to those who choose to rent, or have no other option but to rent.”

A petition against Section 24 tax changes

Section 24 tax changes are currently being phased in, resulting in landlords being unable to claim the full tax relief on mortgage interest payments they had previously been entitled to.

A petition has been set up asking the government to reintroduce full mortgage interest relief, which has received 14,594 signatures to date, and is supported by the Residential Landlords Association (RLA) after some figures suggested it had begun to affect the country’s rental homes market.

Earlier this week, the government released an official response to the petition, stating: “By restricting landlord’s finance cost relief to the basic rate of income tax we are helping to reduce the advantage landlords may have over homeowners in the property market.”

It also adds that there is some good news for landlords, as the tax change will only affect a small portion of people.

“Landlords can still claim income tax relief at their marginal rate of tax on day-to-day running costs incurred in letting out a property, such as letting agent fees and replacing furniture.”

“Finance costs are different to other expenses as having a mortgage allows the landlord to purchase a more expensive property and incur larger gains on the investment than they would have done without it.

“Using actual self-assessment data, HMRC estimate that only one in five landlords will pay more tax on their property income because of this measure.”

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