You can be forgiven if you are a landlord for not reading the industry or mainstream property press quite as much as you used to. It feels like there hasn’t been much good news for landlords in recent years since George Osborne started a politically motivated focus on squeezing the sector for capital at the ballot box when he announced the introduction of additional SDLT rates in 2015.
Since then, there has been the Section 24 of the Finance Act 2015, effectively taxing higher rate taxpayer landlords on their rental profit and their turnover. Then came the Tenant Fees Act in 2019, which denied landlords the contractual ability to get their tenants to clean the property on exit and limited them to only a five week deposit. In between and since there have been EICRs, Right to Rent, and the Smoke & Carbon Monoxide Regulations increasing costs and more red tape. As I write, the Renters Reform Bill is back in the Commons.
In tandem the typically blood thirsty British media quickly capitalised on this strategy using emotive, combative language to sell newspapers, like “Osborne attacks landlords”, and the term “landlord bashing” was borne and instantly became a rally cry for tenants and lobbyists wanting liberal reform but at the same time for landlords themselves who wanted respite from being a political hot potato.
So why have so many landlords chosen to stay invested in the sector then?
Well for two overriding and important reasons, namely house price inflation and rising rents. Both have been increasing at phenomenal rates in the last two years, both of which are very good news for landlords but can only ever be celebrated in private forums such as these. It’s not PC to publicly celebrate that the property ladder is even more out of reach for millions of young buyers, or their rents are climbing five times faster than inflation, and perhaps some humility is best deployed when faced with such scrutiny.
The facts are the facts though. Rents have never climbed faster than in the last two years, by 19% since October 2020 according to Homelet’s respected index, now standing at £1159 pcm across the UK. Likewise, house prices in the same period have risen by 7.2% in the year to August 2021, and a further 11.5% in the last 12 months according to Halifax. So, in pounds, shillings and pence, based on the average property that’s nearly an extra £5000 of rent in the last two years, and a capital increase of £49,000, a ROI of 20%. With the interest rates at below 1% until recently, and even now at 2.25%, that’s got to be one of the best investment vehicles out there.
With supply and demand dynamics as they are, a huge shortage of rented property, a far more quickly increasing population, and now the inflationary pressures we are seeing, rents are only going to continue accelerating fast. Throw into the mix government legislation like the TFA and possibly the Renters Reform Bill, and you have an environment where it pays very handsomely to be a landlord, even if government legislation nibbles away at those returns in the margins. That dynamic isn’t going to change for some years to come until such time as we see some parity on supply with demand.
How can we help?
For landlords using the M A S O N S managed service, conducting regular rent reviews and making sure your rents keep pace with market trends, and updating you on resale values is all part and parcel of the service. Maximising the return on investment is a key part of what attracts so many landlords to M A S O N S in the first place.
M A S O N S is one of Hertfordshire’s leading lettings agencies. We offer an award-winning letting experience for landlords through highly flexible and quality property management services covering Hitchin, Letchworth, Fairfield Park, Stotfold, Biggleswade, Stevenage, Welwyn Garden City and Hatfield.
Contact M A S O N S today. Call 01462 557 477, or email [email protected]