Landlords can still make a profit in 2020

AFS Team·29 January 2020·4 min read
Landlords can still make a profit in 2020

Landlords can still make a profit in 2020

Landlords can still make a decent profit from the private rental sector in 2020, one leading property firm claims.

According to Apropos, there is still lots of potential in the buy to let sector despite the tax and regulatory changes that have been introduced in recent years.

While some landlords have left the sector, there are still lots of landlords who remain committed to delivering quality rental homes.

To underline how important the sector is, the firm points to recent figures revealing that the number of new buy to let loans over the past year saw the second highest number being granted in October.

That's when 6,600 loans were approved, amounting to £1 billion.

Also, the number of buy to let mortgages that are in arrears has dropped by 5% in the third quarter of 2019, compared to the same period in the year before.

'Landlords will consider their future'

The managing director of Apropos, David Alexander, said: "Many landlords will consider their future and 2020 will see the culmination in a range of changes to taxation that were initiated by George Osborne."

He said that while the financial benefits of becoming a landlord have been reduced because they pay more tax, there are still opportunities.

However, he added that many landlords will be facing much higher tax bills as the mortgage interest tax relief will be phased out.

There's also the loss of relief on wear and tear which will hit landlords financially.

He added: "Clearly, many landlords have found recent years challenging and many have sold up and left the market but there is still money that can be made in the private rental sector to provide a healthy pension and a reasonable income to a landlord."

Mr Alexander also said: "Being a landlord is difficult and the best will be ready for change and the need for flexibility for meeting circumstances and landlords must make their business model match the market."

Association demands safeguards for lifetime deposits

Meanwhile, plans by the government to introduce lifetime deposits has led to the Association of Residential Letting Agents to demand safeguards.

Their demand follows an election pledge by the Conservatives to introduce deposit passports that will help make 'renting cheaper and easier'.

In Arla's representation, the organisation states: "The government must introduce measures that will reduce the risk agents and landlords face with three issues to help tackle and prevent negative behavioural changes within the passporting system."

The measures required by Arla include a tenant guarantee, a requirement for an inventory and the need for a written tenancy agreement.