Rented Housing Tax Hikes Hitting Young People
Tax increases on the development of new homes to rent are leaving young people unable to access the homes they need.
That’s the conclusion of new research published today into the impact of recent tax changes in the rental market by the Residential Landlord Association’s (RLA) research exchange, PEARL.
RLA PEARL surveyed almost 3,300 landlords, of which 69 per cent said that the decision to impose a three per cent stamp duty levy on the purchase of new homes to rent in 2016 is putting them off investing in further rental property.
The findings show also that just 18 per cent of the landlords responding to the survey have purchased at least one property in the last 12 months, down nine percentage points compared to the same point last year.
With recent figures from the Institute for Fiscal Studies showing that young adults are “significantly less likely to own a home at a given age than those born only five or ten years earlier”, the results show that young people now face a perfect housing storm, unable to afford a home of their own, whilst investment in new homes to rent stalls.
Although Ministers have sought to boost support for corporate investment in the private rental market, an analysis by the RLA suggests that just two per cent of all private rented households in the UK are build to rent properties.
With the vast majority of landlords being individuals, the RLA is calling for urgent measures to address the housing crisis which continues to get worse. This should include at the very least scrapping the three per cent stamp duty levy where a landlord is prepared to invest in property adding to the net supply of housing. This could include new build, office conversion, bringing empty homes into use or sub-dividing existing large homes into separate dwellings.
The RLA is calling also on the Government to think more creatively about the use of taxation, including providing Capital Gains Tax relief for landlords prepared to sell a property to a sitting tenant. This could form the basis of a new model, encouraging landlords to invest in new rental property, to sell it to their tenant after a set period and for the landlord then to repeat the process.
The RLA Policy Director, David Smith, said:
“Young people are now facing the full force of the housing crisis. Unable to buy a home of their own and with the supply of homes not increasing to meet rising demand, current tax policy is forcing many young adults to rely on their parents for a place to live.
“It is time for the Treasury to think more creatively and use taxation to encourage and support landlords ready, and prepared to invest in the new homes to rent we desperately need.
“Without change we will still be talking of a housing crisis for years to come.”
- Figures from the British Property Federation show that there are 105,214 build to rent units either completed or planned across the UK. See https://www.bpf.org.uk/what-we-do/bpf-build-rent-map-uk. An analysis by Knight Frank, the real estate consultancy last year suggested that there are around 5 million households in the UK in the private rented sector. See http://www.knightfrank.co.uk/blog/2017/06/29/tenant-survey-2017-meet-the-tenants. This suggests that Build to Rent housing makes up just 2.1% of all private rented households in the UK.