Tax changes in the private rented sector have lost the Treasury �1.5 billion in revenue, according to new research commissioned by the NRLA.

Capital Economics found that restrictions in mortgage interest relief had contributed to 1.2 million fewer properties being available in the sector, just when renters across the country faced a shortage of homes.

According to Zoopla, compared to the five-year average, demand for rented housing is up 46% but supply is down 38%.

Capital Economics found that between 2010 and 2016, PRS stock increased by 3.7% a year, while between 2017 and 2021 - when the mortgage interest changes came in - it grew by just 0.4% a year.

The analysis reveals how, if private rented housing stock had continued to grow at a rate of 3.7%, there would have been 6.8 million properties in 2021 - about 1.2 million more than were actually available to rent.

The annual income and corporation tax revenue from these extra rented properties would have boosted Treasury revenue by �1.5 billion, it says.

Full review

The NRLA is calling on the government to conduct a full review of the impact of recent tax rises on the sector, including the impact of Mortgage Interest Relief changes.

It believes ministers must also consider the rationale for the change, given that the Institute for Fiscal Studies has previously argued it was wrong to suggest landlords have been taxed more favourably than homeowners.

Chief executive Ben Beadle (pictured) says its research shows that the government has shot itself in the foot.

'When you consider that the government's rationale for the changes has been refuted by the Institute for Fiscal Studies, it is clear that the Chancellor needs to review this misguided tax hike,'� he adds.