Landlord Perceptions of Mortgage Interest Relief

by | Oct 20, 2017 | Finance & Taxation Reform, Reports

In July 2017, the University of Cambridge published research on residential portfolio management based on a sample of interviews with landlords and stakeholders.[1] The overall conclusion of the research was that landlords had a “strong commitment to the private rented sector and are not likely to leave in a hurry” (p.22).

More specifically, they found that the impact of MIR changes was likely to be “very varied across the sector” (p.23). They highlighted the need for further investigation into landlords with a single property as they “are likely to respond differently to both tax and economic changes” (ibid).

In August 2017, the RLA published research conducted by ourselves at the Centre for Regional, Economic and Social Research (CRESR) from Sheffield Hallam University.[2] This report was based on a survey of almost two thousand landlords and agents.[3] It investigated their experiences with, and perceptions of letting to under-35 year olds. The survey included questions about their responses to changes in MIR.

This survey data has been re-analysed to focus on MIR. In-depth findings of this fresh analysis are presented in this report.

The findings of this report suggests that around one in five landlords think that the MIR changes will make them less likely to let to under-35s. More detailed analysis suggests that both the impact of MIR changes and landlord responses to them are likely to vary considerably across different groups.

The findings suggest there may be a particular impact on landlords with larger portfolios. This is worth noting as it would have a number of implications. The first is the numerical impact. A change in lettings strategy by even a small number of landlords with large portfolios could have a noticeable impact on the availability of homes.

A second impact relates to the different sub-markets within the private rented sector. The survey suggests that MIR changes might have a greater impact on landlords letting to particular sub-markets, most notably claimants of Housing Benefit and Universal Credit. This is concerning given the pressure that already exists in relation to accessing accommodation for Housing Benefit and Universal Credit claimants.

The third possible impact relates to landlords who have decreased their portfolio. It appears that landlords who have decreased their property portfolio over the last five years are most concerned about the impact of MIR changes on their lettings strategy. The implication is that Mortgage Interest Relief changes may be the final straw for some landlords who were receiving only marginal returns on their properties. This is supported by the geographic variation of responses and the open-ended responses from landlords.

[1] Clarke & Heywood (2017) Landlord portfolio management – past and future, http://england.shelter.org.uk/__data/assets/pdf_file/0017/1401461/Landlord_portfolio_management_-_past_and_future_-_final_report.pdf

[2] Pattison & Reeve (2017) Access to homes for under-35’s: The impact of Welfare Reform on Private Renting, https://research.rla.org.uk/report/access-homes-under-35s-impact-welfare-reform-renting/

[3] Different questions were presented to each respondents based on their answers at the start of the survey. This means that the number of responses to each question varies and is presented in the footnotes. The full report (see above) provides full details of the survey methodology.