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Rented housing reforms ‘doomed to failure’ without support for landlords

Renters are expected to be given a boost with ministers promising new minimum tenancies and vowing to build more homes to rent in what the housing minister Gavin Barwell has described as a “change of tone” in the government's attitude towards those who rent their homes.

The long-awaited housing white paper, which will be published today, is expected to include measures to stop developers from hoarding valuable building land and encourage the construction of more homes to rent, as well as buy.

The white paper is forecast to give a renewed push towards encouraging greater institutional investment in the sector.

But efforts to reform and boost the supply of homes for private rent will fail unless those individuals currently making up the majority of the country’s landlords are offered greater support, and this includes encouraging smaller private landlords and supporting them to expand their investment to provide the extra housing urgently required, according to the Residential Landlords Association (RLA).

While minsters want to encourage longer tenancies in the rental market, the RLA point out that official government data shows that the average length of time a tenant in the private rented sector has been in their home is now four years.

Furthermore, research also shows that around a quarter of smaller landlords are prevented from offering tenancies longer than a year by their mortgage lender or insurer, and the RLA is urging the government to now take action to encourage mortgage lenders and insurers to allow landlords to offer longer tenancies.

RLA Chairman, Alan Ward, commented: “Whilst we welcome efforts to boost the supply of homes to rent, this will not be achieved through a single minded focus on corporate investment. The very fact that a renewed push is being made for such investment is a sign that previous efforts have failed.

“Any plan for the rental sector that does not provide equal support and encouragement for the vast majority of individuals making up the country’s landlord population is doomed to failure.

“Instead the government should look again at the tax rises imposed by the previous chancellor on landlords which will only act as a disincentive for the hundreds of thousands of smaller landlords to get more properties on the rental market.” 

Also responding to the government’s proposed housing white paper, John Goodall, CEO and co-founder of Landbay, the buy-to-let lender, said: “Despite the aspirations of millions, home ownership levels continue to dwindle regardless of resolute ambitions made by governments past and present, meaning more people now than ever lean heavily on the private rented sector. A sensible policy discussion is long overdue, so it’s encouraging news that we may finally see some support for what is an increasingly important part of the housing mix.

“There are currently 4.3 million tenants in the rented sector and the fact remains that those hoping to one day purchase a home of their own are relying on a well-served buy-to-let market to ensure that excessive rental growth doesn’t dampen their purchasing power.

“However, recent tax and stamp duty changes for landlords mean that rents continue to feel upward pressure. Simply building more homes is not enough, but building more homes specifically designed to rent rather than buy should go some way to increasing the number of people able to get a foot on the housing ladder down the line.”

  • Peter David

    Section 24 Tax rises will cause me an increase of £40,000 per annum in personal tax. I cannot incorporate due to capital gains liability. I have 14 families happily being looked after. To REMAIN as I am (just keeping above water) - the removal of relief will need my rents to rise sharply every year for the next 4 years. They are already at stretching point so I will have to let the tenants go into council housing, and sell half my stock of houses in order to reduce the mortgage debt. For the government to now announce an initiative to help tenants is beyond mind numbingly incomprehensible

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    May I sympathise with your situation. Probably 500,000 Landlords and consequently circa 2m properties owned by these Landlords who are providing homes to c.4.6m tenants and their families are going to be affected by this tax change. This Government is adamant that rents will not rise as a result and therefore Tenants will not be impacted in anyway. May I urge you and your tenants to write to (or preferably meet) your local MP and explain your situation, the impact that Sec.24 is going to have, the impact on your tenants, and demand the repeal of Sec.24.

    You might well be able to mitigate this tax change so I would urge you to take a look at, in the first instance, https://www.property118.com/tax/.

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