Jonathan Samuels, CEO of Octane Capital, has issued a stark warning to the new Labour government, cautioning that continued pressure on the UK’s buy-to-let landlords could push the already struggling rental market to the brink of collapse. With proposed changes in capital gains tax looming in the upcoming Autumn Statement, landlords are expressing growing concerns about the future of the sector.
Survey reveals landlord discontent
A recent survey commissioned by Octane Capital has revealed the extent of unease among UK landlords. The survey found that 66% of landlords have already reduced the size of their property portfolios in the last year, citing reduced profitability due to previous legislative changes. Many landlords also pointed to the proposed ban on Section 21 evictions and approaching retirement as key reasons for scaling back their investments.
The survey further highlighted landlords’ concerns about Labour’s upcoming Autumn Statement, particularly the potential equalisation of capital gains tax with income tax thresholds. A significant 75% of respondents voiced concerns over this potential policy change, with 58% stating that they would be likely to further reduce their portfolios if the capital gains tax hike is implemented.
Even without additional tax changes, 30% of landlords said they already plan to downsize their portfolios, with ongoing reductions in profitability driving this decision.
The impact of Labour’s policies on the rental market
Jonathan Samuels expressed deep concern over the future of the UK rental market under Labour’s proposed reforms. “It seems that our new Labour government is picking up where its predecessors left off within the rental market landscape, driving legislative changes designed to deter landlords from the sector,” he commented.
Samuels noted that while raising standards in the rental market is an admirable goal, the real crisis lies in the lack of available rental properties. “It’s quite worrying to see that such a large proportion have reduced their portfolio size over the last year, with more planning to do so should the proposed changes to capital gains tax come to fruition,” he added.
Labour’s tenant-first approach, while well-intentioned, risks worsening the availability of rental properties. “A tenant-first approach is all well and good, but the key factor driving the current rental crisis is the lack of available stock, and by further penalising landlords, Labour are set to push the current crisis to breaking point,” Samuels warned.
Tenants may suffer from rental market shake-up
The shortage of rental properties is already driving up rents across the UK, and if landlords continue to leave the market, tenants could face even higher prices and fewer housing options. Samuels emphasised that the current policies could have unintended consequences, ultimately hurting the very people they aim to protect.
“Raising rental market standards is an admirable endeavour, but without the homes themselves, rental prices will continue to spiral, and it’s tenants that will pay the price, either financially or otherwise,” he stated.
As landlords brace for potential tax hikes and further legislative changes, the future of the UK rental market remains uncertain. The Autumn Statement could be a turning point for landlords and tenants alike, and the government will need to carefully consider the impact of its policies to avoid deepening the housing crisis.
