Local authorities and government ‘have it in’ for landlords, says leading agent

One of the East Midlands’ leading property agents has accused the Government and local authorities in the for branding residential landlords as “get rich quick” merchants.

The call comes from David Hargreaves, co-founder of East Midlands property agents FHP, who says government and councils “have it in” for private landlords.

Hargreaves told TheBusinessDesk.com: “In the UK, we have a chronic shortage of housing. Apparently we need 200,000 new houses a year but last year we built 189,650 new homes. Bear in mind though that 2015/16 was a good year – and 11% up on the previous year in terms of houses built.

“The Government can’t afford to provide them and nor can local authorities so over the past 15 years or so, the private sector has stepped up to the plate to an extent whilst at the same time enabling Mr & Mrs Smith to take care of their long term future as the Government can’t afford that either and pension funds have performed abysmally. Indeed there are now 1.9 million private landlords in this country.

“It sounds a match made in heaven or so you would think; the private sector helps solve the housing crisis and take care of its old age.”

Hargreaves told us he thought this was a “perfect” situation for all concerned. However, he continued: “the Government seems to think all these ’money grabbing private investors’ are getting rich quick, and are pushing up house prices. So they are trying to tax them in to submission by applying a three per cent Stamp Duty Surcharge on all purchasers – on average £5k in the East Midlands – and preventing landlords offsetting interest charges against income for tax purposes”

And this is working, he says. Hargreaves continued: “Our local authorities have decided to jump on the bandwagon by first of all introducing the need to obtain an HMO licence if your property has three bedrooms or more – costing a mere £910 for five years and now they are proposing that every let property should pay them £610.

“And then last week, the Government announced letting agents won’t be able to charge admin fees or referencing fees. The result will be that these costs will be passed on to the landlord through higher lettings and management fees. Lettings and managing agents are not making big money and with more and more red tape, these admin fees and referencing fees will have to be replaced somehow.”

Hargreaves added: “So Mr Private Landlord, who was previously earning a net yield after all costs of circa 3.50 – 4.0% will now as a result of increased acquisition costs, increased tax , increased letting and management fees and now licensing fees will be lucky to earn two to three per cent for a significant amount of risk and hassle.”

Hagreaves believes that all central government and local authorities are doing is pushing out the private residential landlord which will reduce the number of homes to rent at the time of an acute shortage. This will then lead to lower house building, he says.

He said: “As one of the key markets for developers shrinks, there will be a lower stamp duty take-up for the Government and, due to an even more restricted supply, we will see rents rise.

“For those investors who remain, their increased costs will also be passed on to tenants in the form of increased rents as well – a double whammy.

None of this is rocket science, said Hargreaves. He added “It is simple economics; restrict supply and the price goes up. Unfortunately for a few popular headlines, the Government and local authority are going to make that basic right of somewhere to live more difficult for those that they really should be helping.”