It appears that the government has finally woken up to the fact that there are too few rental homes to meet demand as a result of landlords quitting because of high tax and red tape.
In a letter to the Levelling Up, Housing and Communities Committee, the junior housing minister Felicity Buchan writes: “I recognise that demand is currently outstripping the supply of properties available to let.”
This comes against the backdrop of figures from Zoopla which show that so far this year, compared with the five-year average, the demand for private rented housing in the UK is up 142 per cent, whilst the supply of such homes has fallen by 46 per cent.
Responding to Buchan’s admission, the policy director of the National Residential Landlords Association - Chris Norris - says: “We welcome the minister’s recognition of the supply crisis in the private rented sector, but the government needs to rectify the mistakes it has made in causing this.
“Since 2015 successive Chancellors have sought to choke off investment in the market with a series of tax hikes. All this has achieved is to cut supply whilst demand continues to soar for fewer and fewer properties. The ultimate losers in this are tenants, who are finding it more difficult to access the homes they need.
“We cannot continue to limp along without a pro-growth strategy which embraces tax measures to support investment and ensure renters can find a place to call home.”
In July 2015 the then Chancellor, George Osborne, announced that mortgage interest relief for private landlords would be restricted to the basic rate of income tax. In November 2015, again as Chancellor, Osborne used the Autumn Statement to announce a three per cent stamp duty levy on the purchase of homes to rent out to be introduced from April 2016.
The 2016 Budget announced that the higher rate of Capital Gains Tax would be cut from 28 to 20 per cent and the basic rate from 18 to 10 per cent. However, it noted that there would be an additional eight per cent surcharge to be paid on residential property.
And then the current Chancellor, Jeremy Hunt, announced last month that the government would reduce the Capital Gains Tax Annual Exempt Amount from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024.
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Lions led by donkeys
It’d be funny if it wasn’t so ridiculous / pathetic
A government incapable of governing or simply just chosen as easily controlled incompetents carrying out the agenda …
….
The problem is they started to reduce the PRS but put nothing in place to replace it. Things move slowly in housing & the Govt has created a huge void & tenants are paying the price.
Tricia, tut tut - their corporate chums are going to sort out the problem don't you know? They're already at 5% of the market and with a fair wind they'll be at 8% by 2030! In the meantime, tenants can enjoy the pleasures of B&Bs or if in sunny Norwich, tents under the flyover, according to Andrew.
There you go - 8% is pretty close to 100% ...... isn't it ??
The trouble is whatever the Government does now it will be too little too late. It is a crisis of their making. They have made enemies of the PRS not friends and do not appreciate the value that we have brought to the rental market - giving tenants choice above all else. For many of us the end is in sight.
You really couldn’t invent this level of stupid, could you?! Although notice how she’s yet another one who studiously ignores the most obvious elephant in the room and pretends to be completely unaware of the ludicrous tax burden. How the govt and media STILL ignore S24 whilst merrily claiming such nonsense as ‘people moving back to cities after covid’ and ‘interest rate rises’ as the causes simply beggars belief.
Trouble is James, S24 is a fiendishly nasty tax that is misunderstood by all politicians. They swallowed the Osborne gloss-over and still don't get that it was engineered, deliberately or otherwise, to destroy the portfolio landlords. I tried to explain the mathematics of it to my MP and it was blindingly obvious that he really didn't get it and still doesn't.
What I still find inexplicable is that the Treasury made zero effort to quantify how many properties would be affected by S24. All they wittered on about was the "one in 4 landlords" whilst completely ignoring the Pareto principle ie those 1 in 4 landlords owned well over half the PRS and therefore the carnage would be widespread.
It isn't difficult to understand if explained logically.
Basically in addition to the 40% tax we already pay and the mortgage interest we already pay we also have to pay an additional 20% of the mortgage interest on top of the already very high tax we have already paid.
So if our mortgage interest is £10000 a year we have to pay that to the mortgage lender plus an extra £2000 to HMRC plus our normal 40% tax.
If our mortgage interest is £50000 the extra tax will be £10000.
When our current mortgage fixes end and we slide onto the new much higher mortgage rates the extra tax will also be much higher. Someone paying £10000 mortgage interest now is likely to be paying closer to £25000 if their fix ends in the next few months. So the extra Section 24 tax will go up from £2000 to £5000.
Even if in reality they are making a loss, the way Section 24 works they are deemed to make a profit because the mortgage interest payments aren't deducted on their tax return.
Jo, you understand it and I also understand it. Unfortunately too much of the population fails to understand basic maths these days, and I can assure you that my MP would have looked baffled by the time he got to your second paragraph!
The main reason that PRS landlords have run for the exit doors ( myself included though I'd never needed to use it until the policy was announced) was/is the outlawing of Section 21 and until that policy is put in the bin where it belongs things can only get worse.
As David says outlawing S21 -> BIN. Along with the rest of the White Paper.
Some may say they have never had to use it in 20 years bla bla bla. But wait until you start getting lots more complaints about repairs. And they can go straight to an Ombudsman. Fancy your chances of winning ANY argument? You get the bill so fix everything and the Ombudsman's bill. And there's also a provision in the White Paper where you will have to APOLOGISE TO YOUR TENANT. I don't recall anywhere saying the tenant will have to make any apologies! :)))
The article is funny 😂 on a worrying level, the fact that Labour felt the need to point it out to the government responsible for causing the problem 🤔🤔 . I would to retract my comment regarding Labour in the light of Nicks sabre like knowledge and observations…. 👍🏻
Have Labour pointed it out? Felicity Buchan mentioned above is Tory.
I have just completed the Rent Smart Wales course and can honestly say that it is no wonder Landlords are selling up
These new contracts now make us responsible for absolutely everything.
I was considering staying in the game, but things have got so stressful, that I believe that it is ultimately going to affect my health.
A house which comes up for rent at the end of December is now going on the market.
The WAG has effectively ruined the PRS in Wales.
Which course provider was it, - online ?
Jo, well said, I gave 2 hours listening an on line Council Training Course other night that Landlords are supposed to do to be able to be a landlord.
I didn’t learn anything only ended up in total confusion
and don’t understand anything about letting any more. Unbelievable it takes 42 years to become this incompetent with those Morons pulling the string’s.
With all those tax and
Legislative changes it certainly creating homelessnesses while reducing stock.
They are not encouraging Private LL’s to houses anyone but the opposite,
I am very concerned about landlord Insurance Policy's or whether they will hold water in the event of a claim, or too many exclusion to be cost effective or effective.
Whether Mr Michael Gove is invalidating the lot and also conflicting with Government requirements.
Government says you must take all comers and not Discriminate against working, no working, Benefit Claimants etc, but the Policy’s always Discriminate and wants to know specific type of person that will occupy the property that’s not possible for landlords to know as Tenants constantly changes their way of life completely outside our control.
The Insurance Company also want to know that is an AST’ a Condition of the Policy.
So many exclusions £1’000. Subsidence, £1’000. Malicious damage by Tenants or Guests, £250.00 any Claim, yet £750. pa premium to Cover £500k Building with the added benefit possibly to temporarily house your Tenants if worst happened, but I suspect they are not going to be housed for free, I’ll pass on that one but in any case I think Insurance’s are too high, don’t forget the 12% premium tax included or if the Policy’s are valid.
The ship is sinking fast. It’s time to bail out now. Save your own life. Don’t worry about the insurance policy wording. Just run!
I've complained about solicitors and used the ombudsman, they have terrible reputation which is well deserved. I have used the property ombudsman against a letting agent, which is a franchise, martinco, they were as bad as the letting agent, who were Pakistanis. Go be fair to the letting agent when in their office they often had some very strange clients, who of whom they were trying to weed out, the very bad ones. I've taken an electrical contractor to court who paid modest compensation. I am now taking the letting agent to court, who didn't turn up at the previous hearing claiming they were on holiday, but submitted a defence, basically not me guv !
The Gove'ment won't admit THEIR part in the lack of rental properties tho will they ! ( through incessant Anti-Landlord legislation & Taxation. )
Not currently Felicity, for the last 7 years, the stats of which I posted on FB/linkedin tonight coincidentally. The gap has widended by at least 2m in that time whilst you have all had your fingers in your ears shouting "la la la la, not listening" as we have all been trying to warn you.
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