Allison Thompson, National Lettings Managing Director of Leaders Romans Group
Throughout 2023, LRG has been keen to awareness about landlords’ vital role in preventing homelessness and advocating for a Landlords Reform Bill to safeguard landlords’ position. Pushing landlords to the limit could lead to serious negative consequences for the housing sector and the individuals it serves.
The concept of the amateur or small-scale landlord emerged in the 1990s as a response to the depletion of the rental market caused by the shortage of council houses. Incentivised by the Right to Buy policy, individuals began investing in properties to help address the shortage and create a supply within the private rented sector. This grassroots movement played a pivotal role in alleviating housing challenges faced by many.
Over the years, numerous changes, including regulatory measures and alterations to mortgage relief, have significantly impacted the position of landlords, leading to some considering selling their properties. These changes have inadvertently affected the private rented sector’s capacity to provide homes and support to those in need.
As homelessness rates continue to rise, evidenced by Prince William’s recent initiative, Homewards, the potential for an even greater increase in homelessness looms if more landlords are compelled to exit the market. Homelessness has a devastating impact on individuals and families and places immense strain on local authorities and charities struggling to manage the crisis.
In a recent survey conducted by LRG, landlords called for a comprehensive Landlords Reform Bill that addresses their concerns and ensures that they are not disproportionately penalised. This Bill would recognise landlords’ essential role in preventing homelessness and provide the necessary safeguards to encourage continued participation in the rental market. The Bill could include dedicated housing courts to speed up the legal process, a repeal of Section 24, and an increase of social housing stock.
A repeal of Section 24 is needed, as Section 24 removes a landlord’s right to deduct the majority of their finance costs, including mortgage interest and arrangement fees, from their rental income before calculating their tax liability. It is putting up costs, which puts up rents, which contributes to hardship and homelessness.
Over 29,000 landlords signed a recent petition calling on the Government to reverse Section 24, but the government confirmed they would continue to set mortgage interest relief against rental income only at the basic rate of tax. Due to substantially increased costs (not only of property finance, but of energy and building materials) this change is much needed.