How a Change in Taxation Could Increase Rent

January 4, 2019

real estate

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For those who cannot afford to purchase a property through an estate agent or property auction Northumberland, renting is a popular choice. Although you can find bargains at property auctions Northumberland, if you’re not in a position to buy, whether financially or for other reasons, this is no good. Renting allows you to live in a space that’s technically not yours, but for all intents and purposes is.

However, because the place isn’t actually yours, it can be harder to carry out home improvements that you’d like to, or to invest fully in it. Despite signing contracts, even long-term ones, it feels like there is more uncertainty about renting than buying a home at a property auction Sunderland or through an estate agent.

While renting is a good short-term solution, it can be expensive over time, and inhibit your ability to save for your future, be that for purchasing a home from an estate agent or property auction Northumberland, a new car, a holiday or more. Unfortunately, it looks as if rent payments are about to soar in the next five years, due to a shortage of properties available to let.

According to the Royal Institution of Chartered Surveyors (RICS), a group of letting agents reported that the number of new properties they had received fell for the 12st month in a row in June. They believe that this drop may be due to recent tax changes which have made buying properties specifically to let them a lot less appealing to investors. This change could leave property auctions Northumberland as the most effective way for first-time buyers to get a bargain and their foot on the property ladder.

A policy manager from the RICS laid the blame on the new policy on taxes and stamp duty: “They have made it so difficult for landlords at a time when the UK needs more homes to rent, but they are exiting the market instead.” The Government’s introduction of a 3% stamp duty surcharge on properties bought at property auctions Northumberland or through estate agents for a purpose other than a main property can be a big hit for some landlords.

On top of this, there has been a slow reduction of mortgage interest tax relief, leading to more worrisome mortgage payments, and an end to the ‘wear and tear’ allowance. All of this is leading existing landlords, or potential landlords, to pump the brakes when it comes to buying a property to let at a property auction Sunderland or an estate agent’s office.

The Government introduced these changes in order to help first time buyers get on the property ladder, as landlords will often be looking for a similar property at a property auction Northumberland. Whilst this is positive for anyone looking to buy their first home, people who want to rent a place are finding it harder, and more expensive, to find a place they want to stay in.

This reduction in property being bought for renting out has caused a mismatch between supply and demand, which in turn is forcing rents higher. It has been predicted that rent could jump by 15% in the next five years, which is a considerable amount. For first-time movers, it is looking more and more likely that purchasing a home through an estate agent or property auction Sunderland will be a lot less expensive than renting.