There will be a reduced supply of rental housing and higher rents after the April tax hike for buy-to-let investors, that’s are according to the Association of Residential Letting Agents (ARLA).
The latest English Housing Survey shows there were 4.3 million households renting privately in England, very nearly 20% all households, in 2014-15. This is predicted by property consultants Savills to grow to approaching 25% of all households by 2025. There are now more young people renting than ever before. In 2004-05, 24% of the 25 to 34 age group lived in the private rented sector. This figure had risen to 46% by 2014-15.
George Osborne’s is stamp duty surcharge for buy-to-let and second homes purchases, plus his raid on mortgage interest reliefs for landlords, as he targets the private rented sector (PRS) to raise money for his policies to support first-time buyers, with Help to Buy, will “cool off” the housing market.
An ARLA survey of its members has found that 63% expect rental supply to drop after April as fewer buy-to-let investors enter the market, deterred by the higher stamp duty and the other recent tax increases on landlords.
And 57% thought that the tax rises will lead to higher rents. Letting agents in London, where there is a particularly serious housing shortage, almost three-quarters of them 73%, expect this will happen.
David Cox, managing director of ARLA has said:
“The stamp duty changes are now imminent, and as well as hitting small landlords, they will also impact institutional investors.
“Although members are reporting a rush from landlords trying to snap up their buy-to-let investments now, it’s likely that we’ll see the buy-to-let market drop like a stone come April and probably not pick up again until next year. This will most certainly cause rents to increase, with supply dropping, as competition for the limited availability of properties intensifies.”
Mr Osborne, following stated Conservative policy, is aiming to increase home ownership, but given the housing shortage in some areas of the country, it is thought that very likely his tax measures will lead directly to a rise in house prices and rents, making it even harder for first-time buyers (FTB) to buy.
The government, it would seem, is putting its faith in a number of schemes designed to help first-time buyers. These include the “Help to Buy” scheme, which makes mortgages cheaper and easier to access, a shared ownership scheme, which allows buyers to part-own, part-rent a home, and a starter homes scheme, which offers discounted homes to under-40s first-time buyers.
ARLA predicts private rentals drought – https://t.co/qqJEqFAJkL
— LandlordZONE (@LandlordZONE) March 30, 2016