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A new report has revealed that landlord confidence has returned, following a turbulent few months. Investors are looking to the future and innovative methods to ensure their portfolios remain financially secure, as well as the continued growth of an already strong private rental market.
The investigation, conducted by Kent Reliance, a banking services provider, reveals that landlords’ confidence is at its greatest level for a year. 54% of investors are confident about the prospects for their portfolios. The survey quizzed around 900 buy-to-let investors and reveals confidence is higher than in the second quarter of 2016, when just 39% said that they were optimistic.
Property investors have been forced into taking action as a result of the additional tax costs that they will face in 2017. Alterations to mortgage interest tax relief and the proposed ban on letting agent fees are likely to push landlords to rethink how best they can keep their portfolios in a profitable financial position.
As a more immediate side effect, rents have also been pushed up by the upcoming tax changes. The average rent for Great Britain now stands at £881 per month, a record high. This comes despite the supply of rental property hitting an 18 month high. Rents were found to have risen by 2.4% over the course of the last 12 months.
It is estimated that in total, landlords are collecting £4.6bn in rent every month.
2017 is expected to bring an acceleration in rental prices. One third of landlords are expected to increase their rents by an average of 5.4% in the next 6 months. Two-thirds said this is due to the threat of higher taxes.
Andy Butts, Sales & Lettings Director at Centrick Property stated, "Private landlords across the country have had a difficult 2016 so far. The increase in Stamp Duty decisively took a toll on the market as a whole and when partnered with the upcoming tax changes, it feels almost that landlords have been more of a political target than viable business operators! That being said, landlords aren't taking it lying down and are taking affirmative action to limit any financial repurcussions. Rents also look to increase further, even after the flood of rental supply experienced earleir this year."
"2017 will appear as a rather different landscape for private landlords, as tax changes begin to take effect and the PRA's new underwriting standards are due to be implemented. However, due to a lack of affordable housing throughout the country and a paradigm shift in the requirements and opinions of younger generations, it is my firm belief that the private rental market looks to continue to bolster in strength for many years to come, providing a viable and valid financial offering for private landlords everywhere."
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