The cut in UK tax breaks for certain buy to let landlords due to be phased in over the next few years could put one in five out of business, new research suggests.
The blow comes at a time when £9.9 billion is lost to rent arrears and damage every year and for some the change in tax could be the final straw. Landlords are also losing £4.5 billion in terms of damage to their properties.
There are also concerns about the new immigration checks on tenants which have been running as a pilot scheme in the West Midland and due to be rolled out nationally, according to the annual landlord report from specialist landlord law firm Access Legal.
It points out that many but to let landlords are running a small business and would not continue if they face making a loss. Currently 33% say they feel that the odds are stacked against them and in favour of tenants.
The research cites extortionate upkeep costs, cuts to tax breaks and around 46% of tenants getting away with not paying their rent arrears, even after court proceedings, as the main reasons for the pessimism.
Three quarters of buy to let investors also stated that they don’t feel money is safe with letting agents, and 43% of landlords have dropped their letting agents to save money and avoid safety issues.
The research says that in total damage, repairs and rent arrears amounts to £9.9 billion every year. £4.5 billion and it means that every landlord in the UK is out of pocket by £6,600 covering these costs, every year.
‘We work with many landlords covering tenant and landlord disputes. The extortionate cost of being a landlord seems to be a figure that keeps growing. Many landlords are subject to damaged properties and rent arrears. The law doesn’t always side with tenants, but it’s a hard process for landlords to go through and a tricky legal system,’ said Eamonn Hogan, a solicitor at Access Legal.
The five most common causes of damage to a property are broken appliances at 41%, damaged decorating at 40%, damaged carpets 37%, lack of cleanliness 33.18% and cigarette burns 22%.
Worst areas in the UK for rent arrears include Cambridge, Newcastle, Oxford, York and Manchester while the worst areas in the UK for property damage include Manchester, London, Wrexham, Chelmsford and Birmingham.
The study also found that 40% of landlords have been subject to a tenant not paying rent and 20% of landlords have been subject to vandalism in their properties.