Buy-to-let landlords currently contribute £15.9bn per year to the British economy through pre-tax spending on running their portfolios, which is more than double the estimated £7.1bn in 2007, owing to the rapid growth of the private rented sector and rising cost of acquiring property, according to a new report from Kent Reliance.
But as their tax burden increases, more than a third - 36% - of landlords surveyed by BDRC Continental on behalf of Kent Reliance are looking to cut their annual spending, a move that could reduce overall spending by more than £500m in total, which would hit the tradesmen and professionals that support the buy-to-let industry, the study by the specialist mortgage lender, which forms part of OneSavings Bank plc., shows.
Property upkeep and maintenance was the most popular area identified by 17% of landlords for potential cost cutting, followed by letting agent fees and mortgage costs - both 10%.
Those landlords anticipate they will reduce spending on letting agent fees by 28%, property maintenance and servicing by 21% and mortgage costs by 15%.
The new ‘Tracking landlords’ costs and economic contributions’ report, part of the lender’s ‘Buy to Let Britain’ research series, states that spending per property stands at £3,632 before tax or mortgage interest - a third of rental income - with the cost of property upkeep, maintenance, and servicing the largest outlay at a combined £5.5bn.
Landlords typically spend £2bn in service charges and ground rent, £963m on insurance, £904m on utilities, and a further £1.1bn on other associated costs of letting a property.
Spending on letting agents’ fees totals £4.7bn each year, with £644m spent on legal and accountancy fees, and £218m on administration costs. Altogether, landlords provide £5.5bn of revenue for these sectors.
John Eastgate, sales and marketing director of OneSavings Bank, commented: “Landlords may seem like an easy target for political point scoring, but they play a vital role in the economy. Not only do they house a huge proportion of the country’s workforce, bridging the housing demand and supply gap, their spending supports thousands of jobs - whether builders, cleaners, lawyers and accountants or letting agents.
“Trying to tackle the housing crisis by targeting landlords with punitive taxes is very simple and politically highly palatable, but has unintended consequences. Either it means less work for all those who support the property industry, or it means tenants will have to foot the bill for the government's tax raid, or both.
“One side effect of the recent changes, and rising running costs, will be the professionalisation of the sector as amateur and accidental landlords leave the market. There is nothing wrong with having fewer, bigger landlords, but that alone will not help more young people get homes.”
https://www.landlordtoday.co.uk/breaking-news/2017/5/buy-to-let-landlords-contribute-15-9bn-a-year-to-uk-economy-study-finds
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