The National Residential Landlords Association (NRLA) is urging the UK Government to review the taxation of private rented housing due to a growing supply crisis.

A research study conducted by BVA-BDRC for the NRLA showed that in Q4 2022, 65% of landlords reported an increase in demand for private rented housing in England and Wales, up from 56% in Q4 2021. Despite the high demand, 30% of respondents plan to reduce the number of properties they rent in 2023, marking the highest level of planned disinvestment in over 6 years. This crisis is largely due to recent tax changes aimed at reducing investment in the sector, such as mortgage interest relief restrictions and a 3% stamp duty levy on buy to let investments, and in the Autumn Statement last year, an effective increase in Capital Gains Tax.

In its submission to the Treasury prior to next month’s Budget, the NRLA is calling for a full review of the taxes affecting the sector. In his statement, Ben Beadle, CEO of the NRLA, said:

“From students queuing to view properties, through to benefit claimants who struggle to access homes they can afford, the impact of the supply crisis in the rental market is stark.

The harsh truth is that the Government’s efforts to discourage investment in the sector are working. But punitive taxation alongside record demand for rented housing is a disastrous combination that serves only to hurt renters.

The supply crisis we see is entirely Government made and the policies of successive Chancellors have backfired spectacularly – it is time to change tack. The Treasury needs to undertake a comprehensive review of the taxation of the rental market. This needs to assess the impact recent tax hikes, including changes to Mortgage Interest Relief and Stamp Duty, are having on supply. We then need pro-growth measures to support renters to access the homes they need.

We encourage all of those with an interest in housing supply to contact their MP in support of our call, making use of the NRLA’s toolkit to help”.