New landlords 'up by 100,000 a year'

The number of new landlords in the UK has risen by around 100,000 a year since 2012, but this is set to level out and possibly decline, according to financial services firm NFU Mutual.

Analysis of the Personal Incomes Statistics for 2015-16, compiled by the Office for National Statistics, confirmed the ongoing trend for more people to make money from property, either as active investors or as householders simply making the most of having a spare room.

The NFU study calculated that the total net income for landlords in 2015-16 was £16.2 billion, up £4.1 billion on four years previously.

While landlords may be doing well, so too is the Treasury, NFU Mutual noted. Chartered financial planner at the firm Sean McCann commented: “The chancellor will be rubbing his hands in anticipation as these huge incomes from dividends and properties give the taxman two bites at the cherry.”

He noted that the Office for Budget Responsibility expects capital gains tax receipts to jump from £8.8 billion in this tax year to £9.9 billion in 2018-19 and £13.3 billion by 2022-23. Mr McCann suggested this reflects an anticipation that many landlords will cash in their properties.

Capital gains tax is a bigger issue for those selling property than for people selling shares. In the latter case, gains are taxed at between ten and 20 per cent, but for anyone selling a property that is not their own home, rates range from 18-28 per cent.

Noting the charges that could arise, Mr McCann remarked: “It’s likely we’ll see the number of landlords start to plateau or even fall over the next few years as property investors start to feel the pinch from a series of tax measures that have already come into force.”

While companies like NFU Mutual might work with investors on ways to reduce their tax liabilities, other landlords might find working with a letting agency to make the most of the opportunities the rental market offers is the best investment option.