C
hancellor Rachel Reeves’s Autumn Budget in the UK dealt a potential blow to landlords in the
private rental market and may lead many of them to sell up, creating a housing shortage. This could have an impact on the supply of rental properties in areas with high demand, such as London and the major UK cities, which are prime markets for relocating individuals and families. “Landlords have been fleeing
the property market in droves and the trend had been accelerating thanks to fears that Capital Gains Tax on residential property would rise in the budget,” says Sarah Coles, head of personal finance, Hargreaves Lansdown. NAVA Propertymark, an auctioneer, says it is concerned that a 2% increase in Stamp Duty on second homes or buy-to-let residential properties will lead to investors exiting the private rental market and reduce the supply of homes to rent, thereby leading to further rent rises for tenants. “Following the Budget announcement on the increase in SDLT [Stamp Duty Land Tax] on second homes and rental properties from 3% to 5%, coupled with many local authorities doubling council tax on second homes, there is little doubt that this will have an impact on investors and likely lead to them exiting the market, perhaps quicker than they had intended to with less homes to rent leading to increases in rents across the board,” says Stuart Collar-Brown, NAVA Propertymark president.
IMPACT OF THE AUTUMN BUDGET ON MORTGAGE RATES Sarah Coles says landlords also rushed to sell ahead of a speech they thought would contain a Capital Gains Tax (CGT) rise for investment property. It meant that extra buyer demand resulted in more sales rather than price rises. The speech did come with a blow for these landlords, but not the one they were expecting. Residential property escaped the
CGT tax hike, while the Stamp Duty surcharge for second properties rose
from 3% to 5%. The rise in the Stamp Duty surcharge will mean a bigger tax bill when landlords get into property. The ongoing freeze in income tax thresholds and less generous mortgage tax relief means they pay more tax on rent as they go along. Then, when they come to sell up, there is CGT to pay, which acts as a further disincentive to landlords and investors. It is also likely that buyers will
have to contend with mortgage rates, which are likely to rise as a result of the Autumn Budget. “We can expect mortgage rates to climb,” says Sarah Coles. “The level of borrowing announced in the Budget last week didn’t impress the bond market, which pushed up gilt yields.” Liam Bailey, global head
of Knight Frank’s research department, says that while there was not an uprating of CGT on residential properties, which was good news for landlords, the environment created by the government is still broadly negative. “The flip side is that anyone in
the market who owns property has seen and is probably likely to see above inflation rent rises,” he says. “Rents have risen quite strongly. Affordability is an issue, because in order to have a mobile labour market people need to be able to move around to take up jobs.” As private landlords start to
retreat from the market, he predicts an increase in professional landlords, a trend already seen in the growth of build-to-rent projects on a large scale in major European cities over the past 15 years.
WHAT THE RENTAL REFORM BILL MEANS FOR RELOCATION Another hotly debated topic in the UK’s rental market is the Rental Reform Bill, which seeks to address tenant protection and landlords’ responsibilities. However, some industry experts argue that the reform could inadvertently harm the rental market. By imposing more restrictions on landlords, the legislation may act as a disincentive for landlords to invest in property, leading to a reduction in rental stock, particularly in cities already grappling with housing shortages.
Unlike Germany, where 80%
of housing stock is rented, the UK’s housing market relies more heavily on homeownership, with a far smaller proportion of rental properties. Tightening regulations on landlords may exacerbate an already limited supply of rental homes, particularly outside major cities. This could complicate relocations
for professionals
moving to areas with less rental availability, especially for those needing short- to medium-term housing for work assignments. The London rental market
continues to face an imbalance between supply and demand, and while rents are expected to continue rising, the rate of increase may slow down. “The introduction of the
Renters’ Rights Bill under the new government may lead to additional regulations impacting the market,” says Fruzsina Hodson, senior manager, group destination services at Santa Fe Group.
HOUSING SHORTAGES ACROSS EUROPE ARE IMPACTING RELOCATION SERVICES The housing shortage is not unique to the UK. Europe faces similar issues. In countries like Germany, although the rental market is large, there are significant challenges due to low housing mobility. Many tenants are hesitant to move, especially if they currently enjoy favourable rent deals. This reluctance mirrors trends in the US, where renters are choosing to stay put to avoid higher rates should they
“ Striking a balance between sustainability goals and the practicality of relocation remains challenging, particularly when factoring in personal preferences and the challenge of finding good quality and affordable housing stock.”
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GLOBAL MOBILITY
RE SIDENTIAL PROPERTY
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