In 2018, buy-to-let landlords face a challenge, but with good financial planning, profits can still be made.

Louisa Fletcher, writing for the Daily Express in January 2018, showed how landlords are facing a difficult time at present. This is partly due to Section 24 of the Finance Bill, which was introduced in 2015 and outlined plans to abolish the tax relief on buy-to-let commercial mortgages. Interest rates on commercial mortgages have risen and new regulations are making it more difficult to licence Houses of Multiple Occupation.

Faced with rising costs, some landlords are leaving this business sector. According to the National Landlords Association, 20% of buy-to-let landlords are planning to reduce the number of properties they own.

Some landlords have responded to tax changes by forming limited companies to own property, as these are not affected by the tax relief changes. However, there are costs in setting up companies and any properties sold by limited companies could be subject to capital gains tax.

After outlining the problems faced by landlords, Fletcher is not recommending that all landlords sell up, and notes that there is still a high demand for rented accommodation. Some people are finding it difficult to obtain a mortgage due to stricter lending rules, and when house prices rise, existing tenants stay longer because it takes them more time to save for a house deposit.

Fletcher says that the answer for landlords is solid financial planning, as it is still possible to for them to make profits.