Ministers need to scrap the taxes which are preventing those in need of a home finding suitable accommodation at a reasonable price.
A report based on the Residential Landlords Association’s (RLA) research is predicting that there will be a net loss of 133,000 homes for private rent over the coming year and that the 12 months to March 2017 for England saw a net loss of 46,000 private rented homes, due in the main to the tax hikes.
These RLA statistics are based on questioning members, over 2,600 landlords, indicating that 84 per cent of landlords have seen tenant demand increasing or remaining stable during the supply drop, meaning that rents can only go one way – that’s up.
These findings are backed by Association of Residential Letting Agents’ (ARLA) research which also indicates an increase in demand for private rented homes, while at the same time the number of landlords on agents’ books has declined.
The RLA blame the supply drop firmly on the government’s actions, its decision to restrict mortgage interest relief to the basic rate of income tax and also its decision to add a three per cent levy on stamp duty for the purchase of additional homes.
A major focus for the Government in the private rented sector has been its attempts to boost the supply of rentals provided by corporate developers. But the RLA research indicates that these providers represent a miniscule section of the market; so far just two per cent of all private rented households in the UK are in homes developed by corporate investors.
The RLA thinks that the majority of landlords are, and will continue to be, individuals and small businesses, small-scale landlords who are best placed to support small and medium sized building companies by investing in their new houses.
RLA Policy Director, David Smith, had said:
“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.
“Corporate investors are failing to provide the new homes to rent at the pace and scale we need. They are also poorly equipped to meet the housing needs of towns and rural areas.
“The vast majority of landlords are individuals and small businesses, providing good housing to their tenants and supporting local economies. We need to support and encourage them to provide the long term homes to rent needed.
“The Government should use taxation more positively and not penalise landlords who are contributing to badly needed homes to rent.”
Online lettings agent MakeUrMove has also conducted a poll of 1,000 of its landlords, indicating that 49% of them intend to increase their rents, while 51% are considering selling properties due to the tax changes in the rental market.
Alexandra Morris, managing director of MakeUrMove, told Property Industry Eye that the lack of new rental properties on the market will push rents up further and will affect London’s 898,000 tenants most.
Rightmove’s figures show that London rental prices have risen the most in the UK, up around 3.4% on the year.
Mr Morris had said:
“The lettings industry has continually been warning the Government that the changes they’ve introduced to the private rental sector such as the loss of mortgage tax reliefs, additional regulations on landlords and the looming tenants fees ban, would have unintended consequences such as rent increases, and that is now happening in London.
“This increase in rental prices in the capital should ring alarm bells. Action must be taken to ensure it remains financially viable for tenants to rent properties and for landlords to meet their financial obligations.”