Taxes on landlords in the UK’s private rented sector need to be re-examined as new research shows that the country faces a net loss of 133,000 homes for rent over the next 12 months, it is suggested.
The phasing out of mortgage tax relief and the extra 3% stamp duty on those buying second homes, which affects many landlords, is resulting in them leaving the sector, according to research from Pearl, the research arm of the Residential Landlords Association (RLA).
It points out that the Government’s own figures show that between March 2016 and March 2017 England saw a loss of 46,000 private rented homes.
The research also shows that 84% of landlords have seen tenant demand increasing or remaining stable and this is backed up by figures from the Association of Residential Letting Agents (ARLA) which has also found an increase in demand for private rented homes.
The Pearl report says that 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% 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% of all private rented households in the UK are in homes developed by corporate investors. The majority of landlords are individuals and small businesses which it says is unlikely to change much.
To boost the supply of homes to rent the RLA is calling for the Government to end its tax on new homes. It says that the 3% additional homes tax should not be applied where landlords invest in property adding to the overall supply of housing.
It adds that 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 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,’ said David Smith, RLA policy director.
‘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,’ he pointed out.
‘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,’ he added.
