How Buy to Let Contributes to the Economy

I came across this article on twitter and thought it really interesting – especially as we landlords are often berated in the media.

Buy to let landlords pump £15.9 billion a year into the British economy to support thousands of jobs, says new research.

But recent tax changes have led many to look to cut their costs.

Landlords now have to pay more stamp duty to buy a home, more tax on rental profits while they own the property and enhanced capital gains tax when they sell.

Buy to let mortgage lender Kent Reliance has looked at what landlords spend and found that 36% are looking at cuts, while 5% may put rents up to cover increasing tax.

The most popular planned cuts are in maintenance and upkeep (17%); letting agent and mortgage costs (10% each).

The survey predicts cuts will be between 15% and 25% for each home, which will total £500 million nationwide and have a significant impact on self-employed tradesmen

Landlords spend an average £3,632 a year on maintaining a home before tax and mortgage interest, which is about a third of rental income.

Researchers found that average annual running costs for each property are:

Maintenance and repairs cost £1,025 a year
Letting agents – £870
Service charges and ground rents – £374
Insurance – £181
Legal and accountancy fees – £121
Licenses and administrative fees – £41
Lost rental while awaiting new tenants – £652
Punitive taxes

John Eastgate, sales and marketing director of OneSavings Bank, which owns Kent Reliance, said: “Landlords may seem like an easy target for political point scoring, but they play a vital role in the economy.

“Not only do they house a huge proportion of the country’s workforce, bridging the housing demand and supply gap, their spending supports thousands of jobs – whether builders, cleaners, lawyers and accountants or letting agents.

“Trying to tackle the housing crisis by targeting landlords with punitive taxes is very simple and politically highly palatable, but has unintended consequences. Either it means less work for all those who support the property industry, or it means tenants will have to foot the bill for the government’s tax raid, or both.”

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