Optimism as Landlords Take Action Over Tax Changes

The latest Paragon Private Rented Sector trends report has revealed a modest improvement in optimism as landlords ‘begin to take action’ ahead of the tax relief changes due to be introduced shortly.

The most common reaction, possibly leading to the renewed optimism, has been to increase rent, with 24 per cent taking this step in order to maintain their current portfolios. 21 per cent of landlords confirmed that they would be focusing on their current array of properties, with no view to expanding. 16 per cent have hinted that they may consider selling some of their properties.

It was found that 65 per cent of landlords reported no change in sentiment, with a mere 12 per cent feeling more pessimistic than three months ago. This figure is down from 18 per cent in the last report three months earlier. Paragon has attributed to a growing awareness of the implications of tax relief changes following their phasing in in April. 58 per cent of landlords have already taken action as a result of the changes, or are making plans to take action in the near future.

Paragon managing director John Heron commented: ‘We’ve reached a critical time for landlords looking to plan ahead and this is reflected in the Q4 report. It’s clear that landlords’ understanding of the changes has improved and that more landlords are developing a clear strategy to address the impact of the changes. However, despite increasing optimism, we must remain cautious.

‘The changes have not started to be implemented yet and the full impact will not be felt for many years. 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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