New research from the National Landlords Association (NLA) shows that 79% of landlords are only servicing the interest on their mortgages. As they contend with the rising costs of the business, it seems they are not able to pay down significantly on their loans.
The statistic has prompted the NLA to examine the narrative that tenants are only paying off their landlord’s mortgage. In a discussion paper, published in London this week, by the NLA and PricedOut (the campaign for affordable housing), both sides of the argument were discussed.
The NLA maintains that there are many costs to running a successful lettings business, which many tenants don’t always consider.
PricedOut comments: “We are deep into a housing crisis. There are few who would disagree. The crisis is one of affordability, and its key, long-running detriment: new supply. The Government enjoys the rhetoric of the housing crisis, and is even very good at outlining the problem and the causes. But, for reasons best known to itself, it will not introduce policies that will fix the problem.”
Richard Lambert, CEO of the NLA, says: “There are myriad costs to running a letting business, including maintenance, repairs and upgrades, licensing, and insurance. Rents have to cover all these costs, as well as the interest on a mortgage, where there is one.
“Housing is expensive for everyone at present. The Government needs to encourage the supply of housing in all tenures, including the private rented sector.”
The recommendations by the NLA in the discussion paper are:
- Allow more time for existing policies to bed in (five years), and evaluate their effectiveness, before new policies and regulations are made.
- Encourage building more housing of all tenures, by simplifying planning and borrowing rules.
- Stop taxing professional landlords out of the market. The loss of good landlords will not make renting more affordable, it will simply drive up the cost for those who want to access decent rented homes.
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