The buy-to-let landlord is being “scapegoated” but in reality the private rented sector (PRS) needs to be supported by government. That’s according to a recent media release from the Royal Institution of Chartered Surveyors (RICS).
Recent punitive tax hikes on the buy-to-let landlord will deter them from investing and from increasing much needed supply of rental housing RICS claims.
Measures introduced by the previous Chancellor, George Osborne, are resulting in the “strangulation of buy-to-let” by the government, which has made landlords a “scapegoat” for the country’s housing crisis. It will contribute even more to a massive shortage of rental properties in the future, the leading industry body has said.
RICS predicts that by 2025 there will be a 1.8 million rental homes shortage in the UK. A survey of buy-to-let investors by the body has found 86% of landlords did not plan to increase their portfolio of rental properties in 2016 and 58% of estate agents reported a drop in buy-to-let sales since May. RICS thinks that under the present set of government measures, this trend is set to continue for five years.
This appears to be the first instance of one of the major industry professional bodies acknowledging the importance of the small-scale buy-to-let landlord in the housing shortage equation as they have more recently been silent on the issue, being strongly in favour of more institutional investment into the sector.
In April this year stamp duty on purchases of additional properties to an “own residence” by 3% and tax reliefs for landlords on mortgage interest payments and maintenance costs are being reduced on a phased-in basis over 4 years. In addition, the Bank of England is imposing more rigorous controls on mortgage lending criteria for buy-to-let.
RICS is suggesting that some of these tax changes should be reversed to support the supply of rental housing, for which there is still a steadily growing demand. This is in addition to its support for build-for-rent with the government offering tax breaks for institutional investment in the PRS – pension and other funds which will finance the construction of affordable rental homes.
There appears to be a glimmer of hope in this direction with a new Chancellor, himself an experienced property industry executive, and a legal challenge to the tax measures progressing from a group of “crowd funded” landlords.
Jenny Blackburn, head of policy at RICS, has said:
“We are facing a critical rental shortage and need to get Britain building in a way that benefits a cross section of society, not just the fortunate few.
“The private rented sector became a scapegoat under the previous prime minister, and because of that it suffered. Yet with increasingly unaffordable house prices, the majority of British households will be relying on the rental sector in the future.
“We must ensure that it is fit for purpose, and the government must put in place the measures that will allow the rental sector to thrive. Any restrictions on supply will push up rents, marginalising those members of society who are already struggling.”
RICS claims landlords are “scapegoats” on tax https://t.co/AwJEAXgEbq
— LandlordZONE (@LandlordZONE) October 6, 2016