ONE in five private landlords is now less willing to rent to young people as a result of tax increases being imposed according to new research published today.
With half of 16 to 34 year olds now living in the private rented sector, the Residential Landlords Association is warning that young tenants will be hit hardest by the changes as landlords consider moving out of the long term rental market.
Since April this year mortgage interest relief for landlords is being phased out to the basic rate of income tax only and landlords are being taxed on their turnover instead of their profit, unlike any other business.
According to the research by Sheffield Hallam University for the RLA, 19 per cent of landlords are less willing to rent to under-35s as a result of the tax increases. Previous studies have found that many landlords are moving to the short term holiday let market to avoid the tax increases, are looking to increase rents to cover the extra costs or are planning to sell properties so cutting supply for young people who need long term rental accommodation the most.
Following a commitment by the Communities Secretary, Sajid Javid, at the Conservative Party conference that the Budget next month would include incentives to encourage and support landlords offering longer tenancies, 52 per cent of landlords said tax relief for offering longer tenancies would make them more likely to rent to under 35s. 58 per cent said that reversing the mortgage interest changes altogether would make them more likely to do so.
Commenting on the findings, RLA Policy Director, David Smith, said:
“As Ministers work on a Budget aimed at supporting young people, today’s findings show that it will be this very same group that is hit hardest by tax rises on the private rental market.
“With many landlords considering changes to their lettings strategies to escape the hikes many young people will find it increasingly difficult to find the long term homes to rent they desperately need.
“Ahead of the Budget we are calling on the Government to scrap the tax hikes and support good landlords to develop the new homes to rent we need alongside all other tenures.”
- The RLA represents over 50,000 private sector residential landlords in England and Wales.
- The Sheffield Hallam University research for the RLA can be accessed here
- According to the 2015/16 English Housing Survey, 49.4% of all 16-34 year olds are in the private rented sector. Details can be accessed here
- Analysis by the RLA across the London has found that there has been a 75 per cent increase in the number of multi-listings on Airbnb between February 2016 and March 2017. Multi-listings are classed as individuals advertising more than one property on Airbnb. A UK wide survey by the RLA of almost 1,500 landlords has found that seven per cent reported that they had now started to offer properties as holiday/short term lets through Airbnb or a similar platform. These are properties that they would have previously been let longer term in the private rented sector. If this was reflected across the whole sector, this would mean a minimum of 134,400 private rented homes moving from the traditional private rental market to holiday or short let accommodation. Further details can be found in the RLA’s report here
- According to a survey of almost 3,000 landlords by the RLA 22 per cent plan to sell at least one of their properties over the next year, with just 18 per cent planning to buy additional properties to rent. This is despite 33 per cent having seen an increase in demand for homes to rent over the past three years. The research can be accessed here
- Research by BDRC Continental published in August found that 30 per cent of landlords have increase rents to cover the costs of increased taxation. Details can be accessed here