The UK’s rental market is evidently highly beneficial and profitable for landlords and owners, with billions of pounds being brought into the market every year from the more than five million tenants who now choose to rent privately. But have you ever thought about the impressive wider impact the sector also has on the economy of the country?
According to a new report unveiled by Kent Reliance, which looked at taxation and the potential problems that some sectors could face if the cost of being a landlord went up at all in the coming year’s post-tax hike, the economy does see a significant impact from private sector rental properties, which creates jobs and generates money.
UK rental market
The study found that the average cost of running a property in the UK rental market, either independently, through a letting agent or through a management company, is some £3,632 before tax. This includes, among the most costly charges landlords face, maintenance and repairs, agents or management fees, service charges, insurance and legal fees.
When we consider all of the different sectors that these charges cover, it’s easy to see why landlords are contributing to the sustaining of a high number of jobs nationwide, with labourers, lawyers, property managers, letting agents and many more all employed because of the private rented sector.
And when it comes to the tax that landlords pay – be it Stamp Duty, income tax or otherwise – they are contributing even more to the economy. According to the Kent Reliance research, overall, landlords are able to generate a little under £16 billion (£15.9 billion) every year for the economy through their taxes.
However, John Eastgate, sales and marketing director of OneSavings Bank, which owns Kent Reliance, said that the government mustn’t see this as a reason to push landlords into paying even more in taxes in the future, which he described as “punitive” payments for an easy target market.
The reality is that if more landlords are forced to pay more money than they already are on taxes, then many will start to look elsewhere for their income. It could mean people leaving the market and selling their properties, which will mean less tax from the rental market for the government. And on top of this, there’s also a likelihood that fewer landlords will decide to spend on non-essential maintenance and other extras, potentially harming the jobs that the sector itself has helped to create.