Jeremy Hunt and Boris Johnson, the two men competing to become the next Conservative Party leader, are being to urged to support investment in the private rented sector, as research shows that 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 many landlords selling their buy-to-let properties.
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 buy-to-let 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 primarily by the government’s draconian tax changes.
Government data shows that 10% of landlords representing 18% of all tenancies in the sector plan to reduce the number of properties they rent out whilst 5% of landlords representing 5% of tenancies plan to leave the sector altogether.
Recent Residential Landlords Association (RLA) research suggests that almost half - 46% - of landlords are planning to sell some or all of their properties.
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.
The RLA is now calling on the leadership candidates to back its five point plan for the sector:
1: Pro-growth taxation to ensure enough homes to rent to meet growing demand.
2: A fair system for repossessing properties that protects tenants from unfair evictions whilst retaining the confidence of landlords to regain possession of their property where there is a legitimate need. This needs to be coupled with a dedicated, housing court to settle disputes swifter and easier.
3: Supporting vulnerable tenants by ending the Local Housing Allowance cap.
4: Rooting out criminal landlords by providing councils with more resources to better use the powers they already have.
5: Rejecting all forms of rent controls which serve only to dry up the supply of homes to rent, reducing choice for tenants and thereby increasing rents overall.
David Smith, policy director for the RLA, commented: “The new Conservative Prime Minister needs to reconsider the approach to the private rented sector. Otherwise the situation for tenants will just get worse as they face less choice and higher rents because of a growing shortage of properties.
“We need a raft of changes that will encourage more investment in high standard homes rather than efforts to scapegoat landlords for failures by successive governments to build enough homes.”