According to new research carried out by the Residential Landlords Association’s (RLA) research arm known as PEARL, the UK Private Rental Sector could soon see the loss of 133,000 homes, at a time when in many locations rental vacant accommodation is getting scarce.
Consequently, rental prices are set to rise, and according to another recent survey of The Royal Institution of Chartered Surveyors (RICS) members, letting and estate agents, rents could rise by 15pc over the next five years.
Landlords and their representative bodies are blaming this on the Government’s squeeze on landlords; tax changes, tightening of mortgage rules, and increasingly onerous regulations which are in combination forcing landlords to sell up, warn the surveyors.
RICS says letting agents are reporting a drop in rental properties coming onto the market for the 21st consecutive month, in July 2018. Surveyors think rents will rise gradually over the next 12 months, and keep on rising for at least another four years. The government’s crackdown on buy-to-let owners over the last few years means fewer homes will become available for renting out.
The RLA’s own survey, which takes in the views of 2600 landlords, shows that tenant demand is not slowing down. Around 84% of landlords reported that tenant demand is either increasing or remaining stable. But rising costs for landlords, making the ability to remain profitable after financing costs, are already forcing owners to sell up. On top of the forecast of 133,000 homes lost to the sector, the RLA recon that around 46,000 private rented homes have already gone.
David Smith, Policy Director for the RLA says:
“The demand for private rental homes shows no signs of slowing up, despite efforts to encourage home ownership. The Government was always mistaken to place homes to own and to rent in opposition to each other rather than seeking to supply more homes in all tenures”.
Dr Tom Simcock, Senior Researcher for the RLA, says:
“These changes make it easier for those who are wealthier and cash-rich to invest in the private rented sector, over those middle income earners that may look to purchase a property with finance while also limiting the access of the sector for the more vulnerable tenants and those who can’t afford to buy nor can’t access social housing”.
As if all this wasn’t enough, the government is currently holding a consultation on the possibility of introducing mandatory three-year tenancies. These would have a probationary period of 6 months when the tenancy could be ended by the landlord, but after that the tenant would have a legal right to stay for the remaining two and a half years, while retaining the right to leave at any time, most likely with one month’s notice.
To combat the exodus, the RLA has called for smart taxation policies that would encourage private landlords to provide long-term homes. It is lobbying the Government to end its tax on new homes, suggesting that the additional 3% levy should be waived where a landlord invests in rental property, adding to the overall rental housing supply.
Landlords should make their views known in this important 3-year Tenancy consultation, which ends 26th August – see here