Philip Hammond is being urged to use his Autumn Budget, which will take place on 29 October, to support investment in the private rented sector, as research shows that buy-to-let landlords are fleeing the buy-to-let market.
Tax and regulation changes continue to have an adverse impact on the buy-to-let market, with landlords selling close to around 3,800 buy-to-let properties a month, according to official data from the Ministry of Housing.
Mortgage interest relief changes, the scrapping of the ‘wear and tear’ allowance and the introduction of the 3% stamp duty surcharge have hit landlords’ profits over the past couple of years, which largely explains why so many people are exiting the BTL market and thus reducing the supply of much needed private rented stock.
Many prospective tenants now face having to bid against each other, pushing rents up in the process, as a result of falling supply caused by a jump in the number of buy-to-let landlords exiting the PRS, due to the government’s draconian tax changes.
With demand from tenants gathering pace, at a time when there has been a striking reduction in the number of new properties for renting, the Royal Institute of Chartered Surveyors (RICS) predicts that national rents could rise by as much as 15% between now and mid-2023.
haart is now calling on the Chancellor to give landlords a tax break in the Autumn Budget.
The letting agent wants the government to remove the additional 3% stamp duty charge on second and buy-to-let homes, which has been imposed on landlords since April 2016.
haart would also like to see a reversal of tax relief changes which are currently being phased in and which will see mortgage interest tax relief replaced by a tax credit limited to the basic rate of tax.
Paul Sloan, development director for haart, said: “We are continuing to see buy-to-let purchasers fall on the year. The additional tax burden which has been placed on the sector has certainly been a setback and we would urge the Chancellor to remove this in the Autumn Budget to encourage investors into the market.
“Landlords have in the past been a popular target for taxation, but the reality is that more and more people need rental properties to live in – and investors are needed to provide them.
“The continued media commentary on the effect that the UK’s departure from the EU might have on the housing market is also unhelpful, especially given that it is largely sensational speculation not based on fact.
“The facts are that property ownership is unsuitable or unaffordable for many and there is insufficient availability of social housing, making privately rented property an accessible and affordable option that is increasingly in demand.
“With a decline in new rental properties coming onto the market and tenant demand continuing to rise, rents are predicted to rise further than house prices – meaning that buy-to-let remains a worthwhile investment.”