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The Residential Landlords Association (RLA) has called upon the government to reconsider the way that landlords are taxed as rental supply falls.
The number of homes coming up to let is in short supply. Over 25 per cent of UK households are predicted to be privately rented by 2025, demonstrating that rental demand is continuing to rise, as rental supply falls. A sharp decline in the number of rental properties available to let has been noted, contributing to a disparity in supply and demand in the rental market.
New data from ARLA Propertymark showed that the number of homes for private rent in England declined by 46,000 between March 2016 and March 2017. This decline happened as buy to let investors were deterred by the introduction of a 3 per cent stamp duty surcharge. This was exacerbated by the government’s decision to pursue a reduction in mortgage interest relief for the basic rate of income tax.
Prime Minister Theresa May launched the new National Planning Policy Framework with a speech arguing that ‘rents come down’ when ‘supply goes up.’ However, the latest figures reveal that almost a quarter, or 23 per cent, of tenants saw their rents increase in March. This is the highest level seen since September 2017 when 27 per cent of landlrods raised prices.
The RLA’s Policy Director, David Smith, commented: ‘The figures [from RLA] show that tax hikes on the sector are choking off supply and making it difficult for prospective tenants, many of whom cannot afford to buy a home of their own, to access the homes to rent they need. At the same time that the Ministry of Housing has published its corporate plan in which it pledges to support the delivery of one million homes by 2020, this is hardly an auspicious start.’
He continued: ‘Delivering homes just for those who can afford to buy is not a policy which meets the needs of many less fortunate households in the UK. With corporate investors still accounting for only two per cent of the private rental market, it is time to develop pro-growth taxation that supports the majority of landlords who are individuals or small businesses to invest in the new homes to rent we desperately need.’