Successive governments are to blame for a chronic shortage in available rental properties, the National Residential Landlords Association has claimed.
‘Since 2015 the government has embarked on a deliberate effort to reduce investment in rental housing. This includes taxing the supply of new homes to rent through a three per cent stamp duty levy. Moreover, the decision to restrict mortgage interest relief to the basic rate of income tax means that, unlike any other business, landlords are taxed on turnover rather than profits’, it said.
The result, according to NRLA research, is that demand for rental property is at a record high and rents have risen.
The research, conducted by BVA/BDRC, shows that 62 per cent of private landlords in England and Wales say they have experienced heightened tenant demand in the first quarter of 2022. Meanwhile more landlords (11 per cent) sold property than purchased new property (8 per cent) in the first three months of the year.
‘Given that renting privately is the first housing tenure most young people enter when they leave home or university, demand will only increase. This is because the 15-24 cohort in the population is forecast to grow between now and 2030 by 866,000 (11 per cent)’, said NRLA.
Official data shows that private rents across the UK increased by 2.4 per cent during the first quarter of 2022. This was the largest annual growth in rents since July 2016, although still much less than inflation which stood at 6.2 per cent over the same period.
Part of the answer would be to scrap the stamp duty levy on the purchase of additional properties. This would result in almost 900,000 more private rented homes being made available across the UK over the next ten years, said NRLA. What is more, it would lead to a £10 billion boost to Treasury revenue in the form of increased corporation tax receipts over the same period.
Ben Beadle, Chief Executive of the National Residential Landlords Association said: ‘Ministers have been repeatedly warned of the damage that would be caused if they continued to attack the private rented sector’, said NRLA chief executive Ben Beadle.
‘The supply crisis is completely counterproductive to the Government’s mission to turn renters into homeowners. By suppressing supply whilst demand increases, with rents going up as a result, they continue to make it harder for tenants to save for a home of their own.
‘The Chancellor needs to wake up to a crisis of the Government’s own making, scrap the tax on new homes to rent and review other measures which add to a landlord’s costs’.