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One in four landlords hike rents in advance of tax changes

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16/02/2017
Landlords are planning ahead to mitigate tax relief changes, and tenants bear the brunt
One in four landlords hike rents in advance of tax changes

Landlords are taking action to offset the impact of tax changes due to hit from April.

But it’s bad news for tenants as the most popular change they are making is to hike rents, according to a survey from Paragon Mortgages.

The buy-to-let lender said that 58% of landlords reported having already taken, or are making plans to take, action ahead of time.

The most commonly reported actions have been to increase the rent charged to cover some or all of the increased cost (24%), to maintain their current properties but not buy any more (21%) and to sell some of their properties and not buy any more (16%).

Bullish buy-to-letters

Paragon also noted a modest improvement in optimism among landlords.

Despite turbulence following announcements from the Government in 2015 that tax relief on buy-to-let mortgage interest would be reduced and stamp duty increased, 22% of landlords surveyed are now more optimistic as they come to terms with the impending changes.

While the majority (65%) of landlords report no change in sentiment, 12% still said that, compared with three months ago, they are now more pessimistic, down from 18% three months ago.

Buying intentions remain way off their peak, with only 13% expecting to purchase buy-to-let property in the next quarter.

John Heron, managing director of Paragon Mortgages, said: “Whilst it is predictable that landlords will seek to increase rents in response to higher costs this clearly will not be good news for tenants, particularly those that are already struggling to save for a deposit.”

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