UK Private rental sector set to lose 133,000 homes
The UK private rental sector could lose more than 100,000 homes over the next 12 months according to the latest research.
RLA’s research group PEARL (the Residential Landlords Association) surveyed 2,600 landlords. In its analysis, it attributed the potential fall in the supply of rental homes to landlords leaving the sector due to tax and regulatory changes.
While tenant needs show no sign of slowing down – with 84% of landlords reporting tenant demand to be increasing or remaining stable – the findings suggest that rising costs are already forcing property-owners to sell up. As well as losing a forecasted 133,000 homes, the report states that an estimated 46,000 private rented homes have already been lost.
Commenting on the findings, RLA Policy Director, David Smith 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”.
Landlord concerns centre on the decision to restrict mortgage interest relief to the basic rate of income tax and the additional 3% on stamp duty for the purchase of subsequent homes.
According to the research, just 2% of all private tenant households in the UK are in homes developed by corporate investors, with the vast majority of landlords made up of individuals and small businesses. As a result, tax changes are making it unviable to operate.
Earlier research found that 62% of landlords believed that the profitability of their investments would be reduced by at least 20%. While 67% said that they were considering minimising their investment due to tax changes.
Dr Tom Simcock, Senior Researcher for the RLA, commented “These changes make it easier for those who are wealthier and cash-rich to invest in the private rented sector, over those middle income earners that may look to purchase a property with finance while also limiting the access of the sector for the more vulnerable tenants and those who can’t afford to buy nor can’t access social housing”.
To stop a landlord exodus, the RLA is calling for “smart taxation policies that support private landlords to provide long-term homes.” For example, the RLA is asking the Government to end its tax on new homes, suggesting that the additional 3% levy should not apply where landlords invest in property that adds to the overall housing supply.
Dr. Simcock also believes that the Government’s recent announcement for a consultation on three-year tenancies could be “beneficial for both landlords and tenants in the right circumstances and signifies a move towards an evolved modern private rented sector”.
He concluded: “We need to move to a broader but fair reform of private renting; with improved access to justice for landlords and tenants, expanded options for the security of tenure, and reformed taxation policy that supports not penalise private landlords.”