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How to adapt to being a Landlord in 2016

Friday 03 June 2016

A multitude of measures - the increase in stamp duty, the scrapping of mortgage interest relief and wear and tear allowance, new right to rent legislation and the threat of further measures by the Financial Policy Committee – have cast a pall over the business of being a landlord in recent months.

Despite this, the BTL sector remains profitable as tenant demand continues to stay high – with one in five households renting privately in the UK, according to recent figures by ResPublica.

'Growing' or 'booming'

In the last quarter of 2015, 43% of landlords surveyed by Kent Reliance said demand was either ‘growing’ or ‘booming’ – up by 3% on the preceding quarter.

Experts predict some landlords will decide to sell up and leave the market, but this will create more demand for accommodation which will translate into high rents, low voids and steady income returns for those who stay the course.

The Bank of England has predicted a 3% wage increase this year, which means rents can still go up and remain affordable for tenants, beating inflation at 2.2%.

According to Kent Reliance, gross rental yields at the end of 2015 averaged 5.3% - a slight dip from 6.4% in the third quarter. Experts predict rental yields to remain level at 6.4% in the coming year.

The new higher rate of stamp duty land tax is hitting all investors and has led to a lull in the market, but it is still possible to negotiate a deal which cuts down, or even wipes out, the extra 3% cost.

Long term investment

Looking at BTL as a long-term investment of 15 to 20 years serves as a reminder that healthy profits are still to be collected when you come to sell the property.

All indicators suggest that house prices will continue to rise in the long term, so given a sensible buy and careful management, landlords should also be able to reap healthy returns on their investments.

Interest rates for mortgages in the BTL sector have fallen to record levels, and landlords are now benefitting from a choice of more than 1,000 very competitive mortgage deals – up from 486 in 2012 according to Moneyfacts.

Mortgage interest relief can still be gained if your property is held in a company, and brokers have seen a 22% rise in BTL applications from limited companies in response to the tax hikes introduced in April.

Government changes mean landlords must be more conscious of their income and expenditure than ever before – but BTL remains a good investment, even if it requires more time doing the maths and making adjustments to future financial plans.


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We want to add value to landlords with interesting news and views! Our Hub includes information and opinions on the housing market from a variety of expert sources – please just be aware it doesn’t always reflect Simple’s opinion, or the products and services we provide.