Companies had previously warned the government not to overburden buy-to-let landlords with too much red tape, as it could lead to an exodus from the market.
Landlords were also motivated by a series of tax reforms over recent years to sell their buy-to-let investments and it is feared pledges by the Labour party to increase tax on unearned income would have a devastating impact on the market
Founder of DJF Asset Management, Dan Fatica, said the main reason for no-fault evictions tends to be sales, the cause of which is the changes in tax policy around mortgage interest offset.
“Previously Interest fees (as much as 60 per cent of gross rent) were deducted as a pre-tax expense, now they are deducted post tax which has pushed a number of landlords into a loss making position, encouraging many who own in personal names and not in a limited company to sell up,” he said.
As interest rates rise, more and more landlords who own in their personal name will fall into this loss-making situation, he said.
“[This encourages] sales to owner occupiers (to achieve highest sale price) and further reducing supply, with a consistent and increasing demand this will only push rents further one way,” he said.
The department for levelling up, housing and communities has been contacted for comment.
sally.hickey@ft.com
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