Here’s what landlords think their biggest challenges and opportunities will be in 2020 and beyond…

Biggest Challenges

Here’s what landlords think their biggest challenges will be over the next few years.

Unsurprisingly, the challenge that was raised most often by landlords was tax.

Over the last few years, many landlords have faced a higher tax bill thanks to new rules.

The Section 24 changes to tax relief have squeezed profits for some individual landlords, meanwhile stamp duty has increased on all additional properties.

72% of the landlords we surveyed think that’s not the end of it either – they expect landlord tax obligations to increase even further over the next few years.

Legislation came a close second when we asked landlords to identify their biggest challenges.

As well as changes to tax rules, Landlords have also had to contend with the increasing demands of other forms of legislation – such as new legislation around Energy Performance Certificates.

Landlords expect to see even more legislation which will impact them negatively. Over half of the landlords we surveyed think legislation around tenancy and eviction will get worse from a landlord perspective over the next few years.

Landlords also felt that the costs involved in letting property will be a significant challenge over the next few years.

71% of the landlords we surveyed think property management and maintenance costs will increase further.

Some landlords raised the new legislation ending letting fees for tenants as a potential cost – it is expected that many letting agents will look to pass these fees on to landlords in order to maintain their profits.

In a trend that can be seen across most UK industries, landlords are also concerned about Brexit. This was the fourth most popular answer when we asked landlords what their biggest challenge would be over the next few years.

45% of the landlords we surveyed think the UK economy will get weaker in the next 1-3 years as we deal with political uncertainty and any economic consequences of Brexit, compared to 23% who think it will get stronger.

Biggest Opportunities

It’s not all doom and gloom for the rental market though – landlords also identified their biggest opportunities for the next few years.

The opportunity that was identified most often by landlords was an increased demand.

A massive 71% of the landlords we surveyed think demand for rental properties will increase, while only 4% think it will decrease.

Landlords highlighted several reasons for why they expected an increase in demand, including a lack of homes being built, first time buyers struggling to get on the property ladder, and people being wary of buying due to Brexit. 

In the challenges section, we discussed the impact that the Section 24 tax changes around interest relief have had on landlords.

However, these changes don’t impact furnished holiday lets - which may be part of the reason landlords identified holiday let properties as one of the biggest opportunities in the sector.

Nearly a quarter of the landlords we surveyed said they were interested in investing in a holiday let property over the next few years. Landlords also highlighted that ‘staycations’ may increase in popularity due to Brexit, so UK holiday lets could be a wise investment.

Holiday lets certainly seem to be a hot trend in the landlord industry at the moment – demonstrated by the fact that they are particularly popular with newer landlords. 64% of new landlords had a holiday let property in their portfolio, compared to 29% of all landlords surveyed.

Many landlords also identified higher rents as a key opportunity.

As previously mentioned, most of the landlords we surveyed expect demand to increase, while 62% of landlords think property prices will increase. If both of these predictions come true, it would enable landlords to increase the amount of rent they ask for on their properties.

The survey respondents also identified developing a portfolio of rental properties as one of the biggest opportunities for landlords.

Despite the potential challenges of tax and legislation, nearly a third of the landlords we surveyed said they were interested in growing their portfolio over the next few years.

There was also interest in building diverse portfolios, with a fifth of landlords considering investing in a property type they don’t already have in their portfolio.

Despite potential tax advantages, there was little interest in managing portfolios on a limited company basis rather than as an individual landlord.

Only 6% of the landlords we surveyed currently owned any of their properties through a limited company. We asked the landlords who didn’t own any properties through a limited company if they would be interested in doing so, but only 1 in 10 were open to going down this route in the next few years.

Our Landlord Mortgages

Monmouthshire Building Society is an experienced Buy-to-Let lender, offering a wide range of mortgages for landlords:

Most investment type property loans are not regulated by the Financial Conduct Authority.

If you fail to keep up with payments on your mortgage a ‘receiver of rent’ may be appointed and/or your rental property may be repossessed.