The National Residential Landlords Association is calling on the government to begin a full review of how private rented housing is taxed, as new figures lay bare the scale of the supply crisis in the sector.

Data compiled by the research consultancy BVA-BDRC for the NRLA shows that in the fourth quarter of 2022, 65 per cent of landlords said that demand for private rented housing had increased across England and Wales. This was up from the 56 per cent of respondents who reported an increase in demand during Q4 2021.

Despite strong demand, 30 per cent of respondents said they plan to cut the number of properties they rent in 2023. This is the highest level of planned disinvestment seen in more than six years according to the research. Just nine per cent say they plan to increase the number of properties they rent out over the next 12 months, down from 14 per cent who said they would do so in Q4 2021.

The crisis facing renters in need of accommodation follows tax changes aimed at dampening investment in the sector. This has included restricting mortgage interest relief, a three per cent stamp duty levy on the purchase of homes to rent out and, in the Autumn Statement last year, an effective hike in Capital Gains Tax.

In its submission to the Treasury prior to next month’s Budget, the NRLA is calling for a full review of taxes which impact the sector. As part of this call to action, the NRLA encourages the Treasury to analyse the combined impact of all recent tax changes on the supply of homes to rent.

NRLA chief executive Ben Beadle says: “From students queuing to view properties, through to benefit claimants who struggle to access homes they can afford, the impact of the supply crisis in the rental market is stark.

“The harsh truth is that the government’s efforts to discourage investment in the sector are working. But punitive taxation alongside record demand for rented housing is a disastrous combination that serves only to hurt renters.

“The supply crisis we see is entirely Government made and the policies of successive Chancellors have backfired spectacularly – it is time to change tack. The Treasury needs to undertake a comprehensive review of the taxation of the rental market. This needs to assess the impact recent tax hikes, including changes to Mortgage Interest Relief and Stamp Duty, are having on supply. We then need pro-growth measures to support renters to access the homes they need.”