Property investors and experts are concerned about Labour\u2019s leaked idea to charge landlords national insurance contributions on their rental income.<\/p>\n
While details have yet to be announced, such contributions are charged at 8% on employee income.<\/p>\n
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: \u201cThe government may feel there is a bit more fat on this calf and can take some of it but a lot of careful thought is needed. These plans might generate some additional revenue but at what cost?<\/p>\n
\u201cLandlords are already being clobbered by tax and regulatory changes which have reduced their profits and increased operating costs. On top of that, the Renters\u2019 Rights Bill is imminent.<\/p>\n
\u201cAs it is, it is widely appreciated that there isn\u2019t enough rental property on the market and if this plan to charge national insurance comes to pass, this extra tax may just be the final straw. This could result in in even lower supply, creating less choice, lower standards and high rents which is what governments want to avoid.<\/p>\n
\u201cAs we have seen with the recent property tax proposals, it is all very well to put these feelers out to gauge reaction but what isn\u2019t always appreciated that even the rumour of change can be enough to put people off.<\/p>\n
\u201cBuyers may be wondering why they should pay stamp duty now if they won\u2019t have to after the Budget if changes are introduced. This could have the effect of compromising the market.<\/p>\n
\u201cI have already spoken to two landlords this morning who are asking \u2018what\u2019s the point?\u2019 following the NI rumours. Anything that is unsettling and compromises confidence is bad news for the housing market, even if it never actually comes to pass.\u201d<\/p>\n
Property investors are likely to hold off making purchases while the potential for a fresh tax hovers over their heads.<\/p>\n
Howard Levy, director of mortgage broker SPF Private Clients, said: \u201cWhile it is difficult to comment until we see the finer detail, there is no information about whether this would be for properties owned in a landlord\u2019s own name or if it would include limited company buy-to-lets.<\/p>\n
\t <\/p>\n
\u201cWhile we understand that Rachel Reeves needs to raise money and is looking at all ways of doing this rather than increase taxes, any further cost imposed on landlords will inevitably be reflected in rents.<\/p>\n
\u201cLandlords need to ensure that their business remains profitable, so any NI payment would need to be factored into the rents they are charging \u2013 so would in effect end up being paid by tenants.<\/p>\n
\u201cThe issue with targeting the private rented sector is that landlords\u2019 net yields have already been stretched over the past few years due to taxation changes, higher costs, licencing changes and higher interest rates.<\/p>\n
\u201cDepending on how high the level of NI the Chancellor looks to introduce, we could see many smaller landlords leaving the market. The upshot of this would then be less stock available to rent which in turn would also increase rents, assuming demand remains the same.\u201d<\/p>\n
Vann Vogstad, founder and chief executive of shared living provider COHO, said HMO landlords and tenants would be hit hardest<\/p>\n
He said: \u201cThese landlords typically generate higher rental income per property than standard buy-to-let investors, meaning they\u2019ll shoulder a particularly large share of the proposed 8% levy.<\/p>\n
\u201cWhile this might seem like a clever revenue-raising move from the Treasury\u2019s perspective, it risks triggering serious consequences for the rental market.<\/p>\n
\u201cFor many landlords, already squeezed by years of tightening regulation and tax changes, this could be the final straw, prompting them to exit the sector altogether.<\/p>\n
\u201cThe inevitable result would be a shrinking supply of rental properties and further upward pressure on rents at a time when tenants are already grappling with sky-high living costs.<\/p>\n
\u201cEven those landlords who stay in the market are likely to seek ways to recoup their losses, and raising rents will be the most direct route.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Property investors and experts are concerned about Labour\u2019s leaked idea to charge landlords national insurance contributions on their rental income. While details have yet to be announced, such contributions are charged at 8% on employee income. Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: \u201cThe government may feel there is […]<\/p>\n","protected":false},"author":1,"featured_media":3075,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-3074","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-second-home"],"yoast_head":"\n