Tax hikes on the private rented sector are damaging buy to let property investors, whilst also failing tenants by fueling rising costs.
The Residential Landlords Association (RLA) has spoken out following research from the Local Government Association (LGA) which has revealed that the average private sector rent is now £852 per month across the country, although this figure is skewed somewhat by higher London rents.
The RLA has argued that rising rents are a reflection of the supply crisis in rental housing, which is dwindling following the new tax changes. The current situation is likely to worsen as mortgage interest relief is phased out over the coming months.
Research by the RLA has revealed that a mere 19 per cent of landlords are expecting to expand their portfolios over the next year. A further 58 per cent are considering reducing further investment in their rental properties due to a lack of finance following tax increases.
The RLA is asserting that it is impossible to supply the homes for private rent that the country needs without providing support for the landlords who are individuals or small firms. As a result of this, the RLA has called upon the government to change its decision to tax landlord’s turnover as opposed to their profit. They also want the mortgage interest relief changes to be abandoned, along with the new additional stamp duty levy.
RLA policy director, David Smith, explained: ‘Today’s research from the LGA shows clearly the problem being caused by the government’s tax increases in a softening economy. Individual landlords are stalling investment in new property as a result of the changes, whilst institutional investors are failing to come forward to provide the homes to rent we need. The government argued that the tax changes were about supporting first time buyers. What has happened is that tenants can’t find the homes to rent they need, whilst being unable to afford a home of their own. The rental housing tax hikes are simply hurting but not working for anyone. It is time to scrap them.’