More than a third of renters can’t afford rents – TDS

Local Housing Allowance was set in 2020 based on rental data gathered in September 2019. At the time (April 2020), more than 70% of rents would have been higher than the LHA Rates.
These rates were frozen until April 2024.
During the intervening period, the BofE base rate rocketed from 0.1% to 5.25%. Inflation was out of control therefore tradespeople increased their costs significantly and the cost of materials rose sharply. We had the pandemic and the government made life very difficult for private landlords by banning evictions and encouraging tenants not to pay rent.
Government, in its wisdom, had introduced Section 24. With rising mortgage rates, the full impact of this unfair and spiteful tax hit landlords at the worst possible time. Especially when you add in more unnecessary regulation such as EICR and the threat of revising minimum EPC targets.
In summary, costs for landlords have increased massively since 2019. BofE’s CPI calculator suggests inflation was 23.8% between 2019 and April 2024 whilst Hargreaves Lansdown’s RPI calculator suggests inflation was 34% over the same period.
In April 2024, the LHA Rates were revised (based on data from September 2023) and the rates in my area rose by less than 11%.
Government recognised the risk of landlords leaving the sector and unfairly reduced CGT allowances to slow the exodus down.
With all of the increased risks that are coming our way, rents will need to rise much more. And the Media, in their ignorance, will blame landlords.

She [Jennifer Harris] adds: “The next Government needs to avoid the temptation to reach for simple solutions....This means addressing the gap between supply and demand in the rental market, reducing costs on the sector and providing certainty about housing benefit levels to enable tenants and landlords to plan for the medium to long term.”

Well done to Jennifer Harris for saying something truthful and intelligent to government when we are presently hearing so much b******* from political parties who either don't understand the issue or are too cynical to care in their headlong rush to buy votes.

If they can't afford the rent they can always move. Its the governments job to subsidise not the landlords.

Reply to the comment left by GlanACC at 21/06/2024 - 10:36
That's partly true. But it's also true that it's government's job to ensure that there is choice. Tenants might not be able to afford their 'own' home to rent. They might have to share. They might have to take a room in someone else's house so looking at the rent-a-room scheme and increasing the amount of tax-exempt income from that scheme would be a smart thing to look at.

Pursuing tax policies that favour big landlords like the Duke of Westminster and large, incorporated landlords whilst implementing measures that penalise small landlords by stopping them offsetting their finance costs against rents drives out competition. All that this does is decrease choice for tenants and drive rents up. Driving up costs in a way that does not benefit tenants also pushes up rents and decreases costs.

Being a landlord is a socially useful activity. It's not as though landlords are selling drugs, robbing banks or promoting knife-crime. But all the mainstream parties are proposing to penalise it to score short-term political points off each other.

Reply to the comment left by Beaver at 21/06/2024 - 10:46
Yup, I agree with most of what you have said. If you are a LTD company then a lot of the issues go away, but a LTD company is no good to anyone who only has a 1 or 2 house portfolio as the costs of running a LTD company will outweigh the benefits

I had 14 properties in a LTD company and that was great until I sold 10 of them. The remaining 4 are now on the borderline of making it sensible for them being in a LTD company (especially as I have no mortgage)

Reply to the comment left by GlanACC at 21/06/2024 - 11:42
But you still potentially benefit from paying corporation tax on them when you sell as opposed to capital gains tax at your marginal rate. Anybody with 1-2 properties will struggle to incorporate and claim roll-over relief and faces a capital gains tax charge if they sell There might even still be a benefit to you from incorporation in terms of IHT, although I don't know your circumstances.

But small portfolio landlords are the majority of the market. And the tax policies of all the main parties...conservative, labour and SNP...have all penalised the majority of landlords in the market and driven competition out at a time when there is a problem with supply of housing. And they are still proposing similar policies now in the run up to an election and relying on the fact that many of the people they are trying to get to vote for them either do not understand the issue at all or are too left-wing to care.

Well done to TDS for pointing out the nonsense in the run-up to an election.

Reply to the comment left by Beaver at 21/06/2024 - 11:56
and another expense is MTD for Landlords reporting which I think comes in in 2026. Most landlords with 1 or 2 properties will likely come in under the proposed £50K limit for reporting .. but watch this space after the election.

Reply to the comment left by GlanACC at 21/06/2024 - 12:12
I think some landlords will either exit or downsize before making tax digital comes in for landlords but I doubt that it's as significant a disincentive as the recent debacles over EPC certificates and EICR reports.

All the main parties still seem to be wedded to landlord-bashing and promising that they are going to build their way out of the problem by reforming the planning system. I was at a cafe this week sat near some builders/property developers who were discussing the fact that in the area in which I live they struggle to get the cost per square metre of what they are building down to a level at which they can build a property, find somebody who can afford to buy it, and make a profit.

Whatever lies they might be telling the electorate now the main parties can't build their way out of the problem. If any of them introduce rent controls the pain of the downstream rent increases as a consequences of lack of supply are likely to be felt by renters during the next parliament.

How about £320 pcm 3 bed house in decent area and tenant struggles to pay that and she recieves housing benifit l don't charge the market rate for ts5 area which is 600 + .you couldn't make it up the council even charge more.

But can these renters who can’t afford their rent still afford take-aways? Booze? Running a car? Holidays? Cinema, clubs, pubs etc?

Just asking