Reeves’ retreat came just in time for landlords

By

Damien Druce

Two weeks ago, the Labour Party leaked a manifesto breaking plan to raise income tax for the first time in over fifty years.

And it’s a good job they did, as Ms. Reeves has since sheepishly backtracked on the idea following improved forecasts and significant backlash from party members and ministers alike.

While an increase in income tax wouldn’t have been good news for anyone, private sector landlords in particular can breathe a sigh of relief at news of the U-turn.

Up until this point, landlords looked set to plug much of the country’s spending gap with money out of their own pockets.

Alongside potential changes to stamp duty, capital gains tax and inheritance tax, as well as talk of a National Insurance levy on rental income, with income tax in the mix this had the potential to create a damaging cocktail for the private rental sector.

And this in a climate where landlords selling up in droves. We recently highlighted in our latest broker insights report that 93,000 buy-to-let landlords will have left the sector by the end of this year.

That’s 93,000 properties that will no longer be available on the rental market at the very least, in a country that’s in desperate need of affordable housing.

For many of those exiting the sector, costs are already too high, with increasing regulation also making the process far harder to manage.

Targeting those landlords who remain in the sector would only force them to raise rents, narrowing the spectrum of affordable housing even further and penalising tenants.

Introducing further cost implications would alienate prospective landlords and investors looking to build or expand on a portfolio.

The private rental sector is a crucial piece of the country’s housing spectrum and contributes to the development and redevelopment of significant quantities of our housing stock.

The last time I checked, the government needs all the help it can get if its stands even the slimmest chance of meeting its 1.5 million new homes target.

And according to the latest government figures, just over 700,000 homes currently sit empty. If private landlords aren’t going to invest in the redevelopment of those homes, who will?

Instead of punishing the private rental sector, the Chancellor’s budget must look inwards to plug this spending gap.

Closely reconsidering all non-essential public spending and working towards a smaller government efficiency with the assistance of AI and other digital tools, that would help cut costs significantly.

This plan may not go down well with the Labour Party, but it would certainly help to curb inflation, which remains at 3.6 per cent, adding further fuel, along with its base rate counterpart, to the cost fire for property investors.

The future of the nation’s housing stock rests in the hands of the private rental sector. By hitting landlords hard with this upcoming budget, Ms. Reeves risks cutting her nose off to spite her face.

Instead, she must consider the implications if landlords continue to sell up and rental costs skyrocket.

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