Finance News

Could property investment soon become financially unviable?

Em Morley - June 27, 2017

A leading industry peer has moved to voice his concerns surrounding the future of the buy-to-let market, following recent announcements and legislation changes.

Last week’s Queen’s Speech were dominated by a number of Brexit bills, but also included the Tenant’s Fees Bill, which proposes banning landlords and letting agents from charging fees to tenants.

Difficulties

This proposal was initially announced last November as part of the Autumn Statement. Despite the details remaining unclear, the move is designed to put the cost of all letting agent fees onto landlords. In turn, an industry peer has expressed concern that this will make it extremely difficult for a number of buy-to-let landlords to make any considerable money moving forwards.

Simon Gerrard, managing director of Martyn Gerrard, called the ban announcement a, ‘headline grabbing knee-jerk reaction,’ from the new Government.

Gerrard observed: ‘This decision has been made with little consideration for the housing industry and my concern is that, moving forward, investing in property will cease to be a financially viable option for the many.’[1]

Could property investment soon become financially unviable?

Could property investment soon become financially unviable?

Rent Rises

Many experts believe the proposed changes in legislation could leave landlords with little choice but to increase rents, as agents pass existing tenants fees onto investors.

ARLA has also moved to suggest that up to 4,000 jobs in the letting sector could be at risk as a result of the alterations.

David Cox, Chief Executive of ARLA, noted: ‘A ban on letting agent fees will cost the sector jobs, make buy-to-let investment even less attractive, and ultimately result in the costs being passed on to tenants.’[1]

‘It’s unlikely the government had enough time to analyse all of the responses from the consultation, as it only closed on the 2nd June. It appears they had already made their decision and therefore the consultation was no more than a ‘tick box’ exercise and they haven’t appropriately taken the industry’s views into account,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/6/investing-in-property-could-soon-cease-to-be-financially-viable