The rise in the number of buy-to-let landlords quitting the buy-to-let sector in response to a raft of tax and regulatory changes has not led to an increase in rents, according to research by Generation Rent.
Changes to tax on buy-to-let properties has led to a lack of new properties going on the rental market, with many experts forecasting that this would lead to rent hikes.
The Royal Institution of Chartered Surveyors’ (RICS), for instance, recently warned that UK rents are expected to rise by 15% in the next five years due to a lack of supply.
But despite the warnings, rents have actually fallen in real terms since additional taxes and restrictions on landlords were first announced in the 2015 Budget.
Dan Wilson Craw, Director of Generation Rent, said: “Warnings of crippling rent rises have been "confounded. In fact, real rents have fallen by 2.8% in the same period.
“There is therefore no evidence that a reduction in the supply of rented homes has pushed up rents.”
Taxes on buy-to-let have had the desired effect of levelling the playing field between homeowners and property investors.
“Despite scaremongering by the property industry, renters have little to fear from a housing market that is no longer a playground for speculators,” said Craw.
The number of first-time buyers has increased sharply since Osborne’s first announcement on landlord taxation in July 2015, while the private rented sector has shrunk by more than 100,000 units since April 2016, when the first of the buy-to-let tax changes, a 3% stamp duty surcharge was introduced.
Craw continued: “If homes leave the private rented sector, then so do the private renters who are now able to become home owners. The balance of supply and demand is unchanged and so are rents.
“Policymakers should therefore worry less about the impact of reforms on landlords’ investment decisions and focus instead on introducing the kind of regulation the sector so badly needs.
“Any efforts to boost home ownership must be matched by reforms that protect tenants whose landlord wants to sell.
“We need to put an end to landlords evicting without a reason and cushion the blow for tenants who are forced to move through no fault of their own. Requiring landlords to compensate tenants would achieve this while encouraging sales with sitting tenants.”
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