Landlords fear taxation over Brexit

Landlords state taxation and economic uncertainty as their biggest short term fears says Direct Line which looked at what landlords are most positive and negative about.

Landlords fear taxation over Brexit

New research by landlord insurer Direct Line for Business reveals taxation and economic uncertainty are the greatest short-term concerns for landlords. The research comes as landlords begin to feel the effects of the tax relief that they get for financial costs such as mortgage interest being restricted to the basic rate of income tax.

Regulation is a key concern for 40% of landlords who are nervous about the increased risk of prosecution and higher penalties. Many worry about being prosecuted under the Immigration Act due to not checking a tenant’s right to rent. This can lead to them facing criminal prosecution with an unlimited fine and up to five years in prison.

Landlords are also concerned about inflationary pressures (40%), which will reduce the value of a landlord’s income and increase their costs.

Landlords are also nervous about competition in the marketplace pushing rental prices down. This could be exacerbated further as 40% of landlords are considering new ways to expand their property portfolio in the coming months, thus increasing supply for renters.


Landlords are most positive about house prices improving in the short term (31%). This optimism appears to be justified too, with the average house price in the UK rising by £12,000 – or 5.6% – in the year leading up to April 2017.

They are also confident that the low interest rate environment will continue for the near future (29%). Indeed, almost a third (32%) of landlords are planning to remortgage their properties, which could in part be linked to the fact that 58% are planning minor renovations to their properties in the coming months – a strong sign that confidence is high in the sector.

Landlords are also optimistic that domestic demand for rental properties will remain buoyant and that the international market for UK properties will remain high (27%).

The UK leaving the European Union doesn’t rank in the top ten short term concerns for landlords, suggesting they don’t think it will have an immediate impact on the property market.  Indeed, more than a quarter (28%) of landlords said they thought Brexit would bring positive benefits for landlords.

Christina Dimitrov, business manager at Direct Line for Business said: “It’s great to see landlords being resilient towards the ever-changing property marketplace and it’s really positive to hear they don’t appear to be worried about Brexit and the impact on demand.

“The continued low interest rate environment can only benefit landlords and tenants. However, experts are predicting an interest rate rise in the future and the Prudential Regulation Authority’s tougher underwriting rules for buy-to-let mortgage lenders may bring some challenges for landlords wanting to expand their portfolios.”

Short term positives in the landlord outlook

Factor % Positive impact
House prices 31 %
Interest rates 29 %
Domestic demand for rental properties 28 %
Brexit / Triggering Article 50 28 %
Foreign demand for UK rental properties 27 %


Negatives in the landlord outlook for the short term

Factor % Negative impact
Taxation 41 %
Economic uncertainty 41 %
Inflation 40 %
Regulation 40 %
Competition bringing rental process down 38 %


Source:  Direct line for Business 2017

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