30% of All Households to Rent from Private Landlords in 30 Years

The private rental sector will continue to grow over the next 30 years, leading to 30% of all households renting from private landlords, according to the latest prediction from franchise estate and letting agent firm Martin & Co.

This forecast was announced in a breakfast briefing yesterday, held to acknowledge the 30 years since Martin & Co let its first property.

The company’s CEO, Ian Wilson, stated that forthcoming changes to landlord taxes and Stamp Duty for buy-to-let investors will not stop landlords making profits.

He claimed that the gradual reduction in mortgage interest tax relief on buy-to-let property loans will not affect many landlords.

He said: “A current income after tax of £1,789 per annum would fall to £894 if rents remain unchanged. However, a 5% per annum increase in rents would take income – after tax – to £1,858 per annum in 2020.”¹

Speaking of the more imminent Stamp Duty surcharge, Wilson commented that it is possible that landlords will leave the sector, leading to lower rental property stock levels.

However, he thinks that this will push rent prices up, making monthly yields more attractive to existing landlords, while encouraging investors to return to the buy-to-let market.

As of 1^st April, buy-to-let landlords and second homebuyers will be charged an extra 3% in Stamp Duty on properties costing £40,000 or more. The change has led to many investors rushing to buy before the surcharge is implemented.

The Managing Director of Martin & Co, Michael Stoop, also expects the sector to adapt in order to provide private rental accommodation for the rise in larger families who must rent their homes.

He said that landlords would diversify their portfolios by purchasing larger properties in less affluent areas, such as three and four-bedroom houses with gardens.

The firm told those at yesterday’s briefing that as a group, it manages 45,000 rental properties – equivalent to the size of Winchester.

Martin & Co has around 300 offices, trading under five different brands.

How do you expect the changes to landlord finances and the expanding private rental sector to affect how you invest in the market?

We will continue providing information for landlords on all issues that may affect their lettings businesses.

¹ http://www.propertyindustryeye.com/private-tenants-to-grow-to-30-of-all-british-households/