The temporary rise in the stamp duty threshold might have seemed like a gift to some, but life is getting tougher for buy-to-let investors. A looming rise in unemployment stands to hinder tenants’ ability to pay their rent, while potential reforms to capital gains tax could increase administration and costs for landlords when they sell properties.
The economic fallout from Covid-19 has already placed some renters under financial strain but the proportion of tenants either unable to pay rent or seeking a reduction is expected to rise over the coming months, as the government’s furlough scheme starts to unwind.
The government’s official guidance has been that landlords and tenants should work together and exhaust all possible options before starting eviction proceedings. But landlords are feeling the pressure. Mortgage payment holidays come to an end on 30 September, while some decided against taking a deferment for fear that it would hinder their ability to borrow in future. The courts were due to reopen for repossession hearings on 23 August after a five-month ban on evictions, but the government unveiled a last-minute extension to 20 September for England and Wales.*