A revealing new report has shown that buy-to-let landlords presently contribute £15.9bn per year to the UK economy through pre-tax spending on running their portfolios.
This is more than double the forecasted £7.1bn in 2007 and is a direct result of the significant growth of the private rental sector and the cost of acquiring property.
Further analysis of the report from Kent Reliance shows that 36% of landlords questioned are looking to cut-back on their yearly spending. It is feared that this could reduce overall spending by over £500m- a real blow to tradesman and professionals that support the industry.
17% of landlords said that they would cut down on property upkeep in order to cut costs, followed by 10% who said they would cut letting agent fees and mortgage costs.
These landlords feel they will cut spending on letting agent fees by 28%, servicing by 21% and mortgage costs by 15%.
The cost of property upkeep, maintenance and servicing was found to be the largest outlay for landlords at a combined total of £5.5bn.
Landlords commutatively spend £2bn on service charges and ground rent, £963 on insurance, £904 on utilities and £1.1bn on associated costs.
Letting agents’ fees came to £4.7bn each year, with £644m spent on legal and accountancy fees.
John Eastgate, sales and marketing director of OneSavings Bank, noted: ‘Landlords may seem like an easy target for political point scoring, but they play a vital role in the economy. Not only do they house a huge proportion of the country’s workforce, bridging the housing demand and supply gap, their spending supports thousands of jobs – whether builders, cleaners, lawyers and accountants or letting agents.’
‘Trying to tackle the housing crisis by targeting landlords with punitive taxes is very simple and politically highly palatable, but has unintended consequences. Either it means less work for all those who support the property industry, or it means tenants will have to foot the bill for the government’s tax raid, or both,’ he continued.
Concluding, Mr Eastgate said: ‘One side effect of the recent changes, and rising running costs, will be the professionalisation of the sector as amateur and accidental landlords leave the market. There is nothing wrong with having fewer, bigger landlords, but that alone will not help more young people get homes.’