The stamp duty hike and mortgage tax relief cuts simply do not add up for buy-to-let landlords, leaving many with little alternative but to increase rents, as reflected by the latest data released by the Local Government Association.

The figures reveal that the average private sector rent is now £852 a month across the country, and while this figure is a mean average rather than the more accurate median rent of £675 figure produced by the Valuation Office Agency – heavily skewed by much higher rents in London – the Residential Landlords Association (RLA) is warning that it is a reflection of the supply crisis in rental housing. This is further demonstrated by sharp falls in buy-to-let mortgage applications.

The RLA fear that the situation is likely to get worse as the mortgage tax relief cuts simply do not add up for buy-to-let landlords, leaving them with little alternative but to increase rents or turf tenants out.

According to research conducted by the RLA, just 19% of landlords plan to invest in new property over the next 12 months, with 58% considering reducing further investment in their rental properties due to recent finance changes because of tax increases.

Although ministers have sought to boost the number of homes for private rent by encouraging institutional investment in the sector, the London School of Economics last year said that individual landlords will remain the dominant players in the market.

The RLA warns that no route can be found to boost the supply of homes for private rent that the country needs without providing support for the majority of landlords who are individuals or small firms.

The trade body is now calling for the government to scrap the decision to tax a landlord’s turnover, rather than profit, abandon the mortgage interest relief changes and to no longer apply the stamp duty levy on additional homes where a property is adding to the supply of housing available to rent.

RLA policy director, David Smith, said: “The 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.”