Propertymark is urging the next government to reconsider the tax rules for landlords to incentivise new investment in the buy-to-let sector, as the number of homes available to rent continues to decline.
Rising Demand and Falling Supply
Demand for privately rented accommodation is growing, yet new data from Rightmove reveals a worrying drop in the number of available rental properties. More tenants are choosing to renew their existing tenancies rather than move, exacerbating the supply-demand imbalance in the private rented sector (PRS).
Nathan Emerson, CEO of Propertymark, emphasised the need for more rental properties to stabilise prices: “Propertymark has long argued that the private rental sector needs more houses to stabilise rental prices, but there is a myriad of other factors that can contribute towards making the market more attractive for both investors and tenants.”
Impact of Tax Relief Changes
Recent changes to tax relief for buy-to-let landlords have deterred many investors from the PRS, resulting in a significant reduction in net rental returns. This has primarily affected private tenants, as landlords have had to raise rents to offset their reduced profits.
“With many landlords having their profits wiped out, the majority of those who have continued to invest in the private rented sector have been left with little alternative but to recoup their losses through high rents, with tenants paying the price of the government’s tax-grab,” Emerson explained.
Call for Government Action
As the general election approaches, Emerson calls for a reformed tax system to encourage more investment in the PRS, ultimately lowering rents for tenants in the long term. “With a general election coming this week, Propertymark would like to see the next government reform the tax system so that more investors can be persuaded to invest in the private rental sector and lower rents for tenants in the long-term.”
He also stressed the importance of a sensible housing programme that protects the green belt and warned against rent controls, citing their negative impact in Scotland. “Whilst we support a greater supply of houses, there has to be a sensible deliverable programme mindful of protecting the green belt wherever possible. It would also be wise for them to avoid rent controls which have had a devastating effect on the private rental sector in Scotland.”
Propertymark’s call for tax reform highlights the urgent need to address the supply shortage in the rental market. As the election approaches, the hope is that the next government will implement policies to encourage investment in the PRS, ensuring a stable and affordable rental market for tenants.
