The past few months have seen growing calls for the introduction of rent controls in private rented housing.
But an RLA analysis of the Government’s independent English Housing Survey shows that private sector rents are falling in real terms. Table 3 on page 19 notes that between 2008/09 and 2012/13:
Average private sector rents increased by £10 from £153 to £163 a week – an increase of 6.5%.
Over the same period average weekly rents in the social sector increased by £18 from £71 to £89. This is an increase of 25.4%.
Over this period, inflation as measured by RPI was 16.2% and CPI was 16.7%.
Between 2011/12 and 2012/13, average weekly rents in the private rented sector fell from £164 to £163, a fall of 0.6%.
In the same period, social sector rents increased from £83 a week to £89 a week, and increase of 7.2%.
In February 2010, the then Labour Government published a consultation on Investment in Private Rented Housing. This outlined the dangers that rent controls pose. Page 11 said:
“A key factor behind the decline in the PRS was the introduction of rent controls during the First World War, and these became more extensive over time. Artificially low rents reduced investment in the sector, contributing to…lower maintenance standards in the stock that remained.”
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Comments
If we look abroad it is evident that tax allowances are far more favourable to B2L investors. Just look at Germany, USA, France. Links to Gov data/reports on the topic on Twitter here @lettingstats.
Social Landlord get grants from the Government private landords do NOT
HC also seems to be forgetting that owner occupiers do in fact receive favourable tax treatment in the form of exempt capital gains, whereas BTL's are taxed up to 28% on any capital gains. Arguably an inflation tax!
Buy to let is the financing of an asset for a business. Any business will set off costs against income prior to taxation. I see no reason why buy to let should be the exception.
But Hugh Counsell's comment is typical. The article clearly states that contrary to the rubbish touted by organisations like shelter, rents in the private sector are actually falling in real terms.
But why bother with the facts? Let's just tax/regulate and restrict private landlords out of existence. Can't have anyone doing better than ourselves, can we Hugh?
Hugh, mortgage tax relief was useful when it existed some time ago but in reality it was not fair. Buy to Let is surely providing houses whether or not one agrees with the funding models or tax breaks?
The favourable tax treatment given to owners of buy to let residential properties should be stopped. There is no reason why an owner occupier receives no tax relief on mortgage interest paid whilst an investor does.