Research finds tax changes leading to private renting sell-off
Ministers need to scrap the tax on new homes which is punishing those in need of a home to rent, the UK’s leading landlord body argues.
A new report being published today by the Residential Landlords Association’s (RLA) research lab, PEARL, warns that the country faces a net loss of 133,000 homes for private rent over the next year. This follows Government figures showing that between March 2016 and March 2017 England saw a loss of 46,000 private rented homes.
Although the Government has sought to support and encourage home ownership, the RLA’s figures, based on questioning over 2,600 landlords, show that 84 per cent of landlords have seen tenant demand increasing or remaining stable. The Association of Residential Letting Agents has also found an increase in demand for private rented homes.
Much of the reason for the fall in supply has been the decision to restrict mortgage interest relief to the basic rate of income tax and the decision to add a 3 per cent levy on stamp duty for the purchase of additional homes.
Whilst the Government has been working to boost the supply of homes to rent by corporate developers, analysis by the RLA suggests that just 2 per cent of all private rented households in the UK are in homes developed by corporate investors. The majority of landlords are, and will continue to be, individuals and small businesses, best positioned to support small and medium sized construction firms.
To boost the supply of homes to rent the RLA is calling for the Government to end its tax on new homes. The 3 per cent stamp duty levy should not be applied where landlords invest in property adding to the overall supply of housing. This includes converting empty offices and shops, turning large homes into small self-contained properties or bringing one of the over 605,000 empty dwellings across England back into use.
The 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.
“Corporate investors are failing to provide the new homes to rent at the pace and scale we need. They are also poorly equipped to meet the housing needs of towns and rural areas.
“The vast majority of landlords are individuals and small businesses, providing good housing to their tenants and supporting local economies. We need to support and encourage them to provide the long term homes to rent needed.
“The government should use taxation more positively and not penalise landlords who are contributing to badly needed homes to rent.”