Rent cap fears halting buy-to-let investment

Evidence is emerging that landlords are amending their plans to invest further in buy-to-let property ahead of May?s general election because of concerns that a Labour Government would introduce rent controls – a rent cap.

Writing in the Daily Telegraph, Anna White claims that fears over the introduction of rent capping under Labour are already having an effect on the private housing rental market, a move which is bound to exacerbate Britain?s chronic housing supply shortage.

Ed Miliband announced last year that the introduction of three-year tenancies, with only limited rent rises permitted in that period, in line with inflation, would be Labour policy if they win the general election in May.

Anna White says that a study of more than 500 landlords has revealed that 40pc won?t expand their property portfolio with the election looming. 26pc said they were anxious that a Labour win 'could knock house prices?.

Data compiled by the Residential Landlords Association (RLA), gathered from the recently published 2014 English Housing Survey, indicates that between 2008 and 2009, and 2012 and 2013, social sector rents increased by more than 25pc. In comparison, average private sector rents increased over the same period by 6.5pc. Inflation, as measured by both CPI and RPI, over this period was around 16pc.

The study, carried out by online estate agent Urban, comes as the Royal Institution of Chartered Surveyors (RICS), the leading industry body for property professionals, says that 'politicians play with the private rented sector (PRS) at their peril?.

Peter Bolton-King, Director General at RICS told the Daily Telegraph:

?The number of people renting is growing rapidly as high prices and strict lending rules prevent many from buying, and the stigma of renting is also disappearing from society, leading to a spike in demand, said.

?The problem is there is not massive amount of money to be made by renting property out. Therefore if these profits are squeezed it is easy to slide into a situation where it becomes too marginal for small landlords to bother,' he said.

?While the rental and the sales market are traditionally quieter before a general election, small and large landlords are worried about rent controls, he added.

?It is very important whatever is done or contemplated the potential effects are very carefully looked at. We cannot afford to see PRS drop and the last time that proper rent controls came in, they decimated the rental sector.?

... LandlordZONE.


Article courtesy of LandlordZONE
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