'Stop the kicking' – what landlords really need from the Budget

With the Budget taking place on Wednesday, landlords are not demanding giveaways. What they want is certainty.

After years of rolling tax changes – from Section 24 to the stamp duty surcharge increase, from capital gains tax allowance cuts to new mandatory landlord registration fees – those operating in the buy-to-let market say the constant shifting of the rules has made it almost impossible to plan. Brokers and advisers working with landlords across the country say the mood heading into Wednesday is one of weary vigilance rather than outright alarm. All they want is to be left alone.

Mortgage Introducer spoke to four industry professionals about what landlords genuinely need from this Budget, and what the consequences could be if the pressure on the private rented sector is not eased.

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Early signals suggest landlords may avoid the worst of Wednesday’s announcements, with speculation pointing to banks rather than individuals bearing the brunt of any new measures.

Jeni Browne (pictured top middle left), sales and marketing director at Mortgage Finance Brokers, sees that as welcome on the surface, but warns the relief may be short-lived. “It sounds like they’re going to be gunning for the banks rather than the individuals, which on first thoughts is quite welcome,” she said. “But there’s obviously going to be implications if banks’ costs go up. They’ve got to pay for that from somewhere, which invariably at some point will impact mortgage rates, so it’s kind of like delayed gratification almost.”

Stability over short-term fixes

Louis Mason (pictured top left), director at Oportfolio in London, says the buy-to-let market is going through something of an identity crisis. Property investment used to be relatively straightforward, he argues. Today it is anything but.

"There's also a growing divide between smaller landlords, who may be questioning whether the administrative burden and diminishing returns are worthwhile, and professional investors who are adapting through portfolio restructuring, limited company borrowing and more selective acquisitions," Mason said.

Browne is hoping for a quiet Budget with no dramatic announcements. Given how much has already landed on landlords, that in itself would feel like progress.

"Landlords are always very, very nervous of the Budget because irrespective of what people say up front, there's no guarantees," she said. "Just because it hasn't been rumoured, it doesn’t mean some little bombshell is not going to suddenly appear from nowhere. Section 24 came in and no one was expecting it, and then it just landed."

Mason points to a deeper problem than any individual tax announcement – the inability to make reliable long-term assumptions about an investment typically financed over decades.

"It's not necessarily higher taxation alone that's discouraging investment, it's the uncertainty about what might come next," he said. "I'd argue that the most valuable thing would be a credible period of stability, rather than another short-term incentive. Landlords don't necessarily need a giveaway. They need to know that if they invest in a property today, they can make reasonably reliable assumptions about its costs, taxation and financial viability over the coming years."

'Just stop the kicking'

Paul Hampton (pictured top middle right), owner and mortgage consultant at Approved Mortgage Solutions in Sunderland, echoes that sentiment directly. "I think most landlords will be happy with just a bit of stability," he said. "Just stop the kicking. Every time there's been a Budget, there's been a change, which has been detrimental to landlords. Most landlords would just like a little bit of time off to get used to the situation, address the situation, and plan how they're going to make some money out of their portfolio."

Hampton, who also co-founded GB Landlords, adds that the sector has been treated as an easy target. "I think for far too long, landlords have just been seen as low-hanging fruit."

He is watching the prospect of further capital gains tax changes with concern. "If you sell your property, you're going to be taxed. If you keep your property, you're going to be taxed. There's not a way out for landlords."

A tax burden that keeps compounding

Browne points to a set of concrete changes she believes would make a genuine difference – among them, meaningful tax incentives for green upgrades that landlords will in many cases be required to carry out ahead of the Minimum Energy Efficiency Standards (MEES) changes in 2030.

Her more fundamental ask is a longer-term commitment on taxation. The inability to model what a portfolio will look like in five or 10 years, covering rental income tax, capital gains tax and stamp duty, makes it exceedingly difficult to run what is, in practice, a business.

"These guys have no long-term certainty, and that's actually really hard to run a business on that basis," Browne said. "It's really, really hard if every 12 months you might have a massive bombshell dropped on you in terms of tax. You never really know where you're standing."

She also calls for clearer tax rules around repairs and improvements – a grey area that regularly leaves landlords uncertain about whether a cost is an allowable expense in the current tax year or a capital improvement that crystallises only on disposal.

Nouran Moustafa (pictured top right), executive financial and mortgage adviser at Roxton Wealth in London, takes a more combative view but shares the underlying diagnosis. Any attempt to squeeze landlords through taxation will ultimately be absorbed and passed on, and it is renters who will bear the cost. "What people don't realise is that at the end of the day it's going to be someone else paying the bill," she said.

Hampton points to the landlord registration fee as a particular irritant for portfolio landlords operating on tight margins. "Some landlords are only making a month's margin on a property, and not all landlords have had the opportunity to put the rent up before the Renters’ Rights Act. It's going to be 18 months before you get your rent increase."

Adapting but not retreating

Despite the pressure, the picture on the ground is not one of mass exits. Hampton says much of the data showing landlords selling up is misread, describing a recent case in which a client transferred 40 properties from personal name into a limited company for tax efficiency. “A lot of the data will show that a landlord sold 40 properties,” he said. “She has, but she sold them to her own limited company just for tax purposes.”

Moustafa goes further, arguing that tougher conditions for smaller landlords consolidate the market in favour of professional investors. “The small landlords that own one or two properties will be too scared and they’re going to pull out of the market,” she said. “The big landlords are going to buy properties cheaper.”

The supply-side warning

The stakes of getting the Budget wrong extend beyond the landlords themselves. Mason is clear on the consequence if the economics of providing rental homes become too unattractive to sustain.

“If we make the economics of providing rental homes increasingly unattractive, we shouldn’t be surprised if fewer people want to provide them,” he said. “If rental supply contracts while tenant demand remains strong, renters can ultimately find themselves facing even greater competition and higher costs. We need to be careful that, in trying to make the rental market fairer for tenants, we don’t inadvertently make rental homes harder to find.”

Moustafa takes a longer view. Whatever the Budget brings, landlords will adapt – as they always have. “A few years back when they decided they will start taxing income from property, what did landlords do? They just opened limited companies and started buying properties in it. With increased stamp duty, what are landlords doing? They are buying uninhabitable properties and converting them. Landlords will always find a way.”

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