Paragon Mortgages’ latest Private Rented Sector Trends report showed a modest improvement in optimism among landlords as they begin to take action ahead of changes to tax relief.
Despite tax relief on buy-to-let mortgage interest being reduced and stamp duty being increased, 22 per cent of landlords were more optimistic as they came to terms with the impending changes.
While the majority (65 per cent) of landlords report no change in sentiment, 12 per cent said that, compared with three months ago, they are now more pessimistic, down from 18 per cent three months ago.
John Heron, managing director of Paragon Mortgages, said: “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.”
The tax relief changes are due to be phased in from April, and 58 per cent 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 per cent), to maintain their current properties but not buy any more (21 per cent) and to sell some of their properties and not buy any more (16 per cent).
As a result, buying intentions, which remain some way off their peak, are slightly improving with 13 per cent expecting to purchase buy-to-let property in the next quarter, up from 11 per cent in Q3.
Paragon surveyed more than 200 landlords for the research.
damian.fantato@ft.com
