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  THE WEST SUSSEX PROPERTY BLOG // THE GOVERNMENT ARE DAMAGING THE PRIVATE RENTED SECTOR, IS THEIR POLICY SHORT SIGHTED?

The Government are damaging the private rented sector, is their policy short sighted?

The Government are damaging the private rented sector, is their policy short sighted?

There are more warning signs that the assault on landlords is adversely affecting the private rented sector.

Letting agent Belvoir’s rental index for the fourth quarter of last year showed that “significantly” less stock was coming on to the market, putting further pressure on the sector.

The news arrived on the same day that it was claimed young people are finding it harder to access the homes they need because the Stamp Duty surcharge has discouraged landlords from buying up more rental property, according to the Residential Landlords Association (RLA).

We hear from potential or current landlords all the time that they will not be increasing their portfolios or investing at the moment because of Government intervention on taxation for Landlords, many more landlords continue the big sell-off.

The industry has been warning that government steps to reduce buy-to-let stock will not help tenants in the future, as it simply means that they will have nowhere to live.

“The big question is: how much of influence is the Government’s pressure on landlords having?

“In reality, although we are seeing slightly less demand from tenants than in the past, there is a lot less stock coming on to the market.”

We would say that rents in Q4 remained static, rents in the south-east average £1,046, and in London they averaged £1,431.

Meanwhile, 69% of the 3,300 landlords surveyed by the RLA said the decision to impose a 3% Stamp Duty levy on the purchase of new homes to rent in 2016 is putting them off further investments.

It also found that just 18% 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.

The RLA said young people were facing a “perfect housing storm”, pointing to figures from the Institute for Fiscal Studies showing that home ownership levels among young adults on middle incomes have suffered substantial falls.

Their ability to access homes would be damaged further by a lack of investment in new homes to rent, it argued.

The RLA claimed that just 2% of all private rented houses in the UK are Build to Rent properties, despite the Government’s increased support for corporate investment through the scheme.

The association called for the Stamp Duty surcharge to be scrapped “at the very least” where a landlord is prepared to invest in property adding to the net supply in housing.

This could include new-build, office conversion, bringing empty homes into use or sub-dividing existing large homes into separate dwellings, it added.

The RLA also called 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.

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.”

 

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