Life as a LANDLORD

Landlords, as ever, are a pretty resilient group, and that’s why the Private Rented Sector remains a sizeable marketplace encompassing almost 20% of the UK housing stock (circa 5.5m properties).
(Source: English Housing Survey, 2022-23, released December 2023 – showing 4.6m PRS properties in England, and then a pro-rata calculation for all of the UK)

It’s understandable though, that landlords enthusiasm for this sector might have waned in light of all that’s been thrown at them over recent years – tax changes, increased regulations, and now higher fixed deal rates for those remortgaging this year. Yet whilst some may be leaving this sector, there are still positives to consider.

Demand remains

A positive finding is that more than 8 in 10 landlords (83%) report strong tenant demand.
(Source: Paragon Bank, PRS Trends, Q1 2024, June 2024 release)

Average rental take is still healthy

Across the UK the average monthly rent was £1,299 (up 5.7% on June 2023), with big regional variations. The highest return was Greater London at £2,103 with the rest of the UK averaging £1,102, and the North East delivering the lowest return at £689.
(Source: Homelet Rental Index report, June 2024)

Tax changes announced in the Spring

The Multiple Dwellings Relief (applicable to England and N. Ireland) was abolished from June, and the Furnished Holiday Lettings tax regime will be abolished in April 2025.

On a positive note, the higher rate of Capital Gains Tax (CGT) on a property sale was cut from 28% to 24%, in April 2024. Time will tell if this remains as is under the new government.
(Source: HM Treasury, March 2024)

Limited Company status

According to Paragon Bank, three-quarters of landlords (74%) who intend to purchase a new rental property in the next year will do so under a Limited Company structure, as opposed to paying income tax as a private landlord.

Buying as a Limited Company offers a number of tax benefits. It allows landlords to deduct mortgage interest from company income and pay tax at Corporation Tax rates, rather than an individual landlord’s personal income tax rate.

The structure can also offer more favourable mortgage financing options. Paragon said that most lenders set interest coverage ratios at 145% for higher-rate taxpayers, whereas Limited Company applications require a ratio of 125%. They can often get higher loan amounts too.

However, it won’t be the most suitable route for all, so do speak to your accountant and solicitor regarding the tax issues, and property structures. And we’re there to give an overview, and to assist with sourcing suitable deals.

And, if your deal rate is ending this year

With around 240,000 fixed rate deals for landlords coming to an end this year, we’re here to help you through this process.
(Source: UK Finance, February 2024)

Whatever your situation, we’d fully assess the suitability of the options on offer. And you can take comfort from the fact that we operate in this sector day-in day-out, plus have the qualifications and expertise to deliver advice that meets your needs.

Your property may be repossessed if you do not keep up repayments on your mortgage.