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.”
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There is no chance of a change. Tenants groups are completely deluded that driving LLs out of the PRS is the answer & it will lead to cheaper housing, tenants able to buy (!) & councils taking housing back under their control(!) when instead it will lead to a even less availability until the void is filled with expensive BTR.
These groups & the Govt have a stated aim of a smaller PRS without any plan to fill the gap we leave in the market. Tax breaks for LLs are never going to happen. Instead tenants are going to suffer, particularly those looking for & unable to access social housing.
I completely agree Tricia. I feel we should all start watching our language though We don’t get Tax breaks we get more and more barriers to entry and get tax penalties not levied at other businesses. The phrase “Tax Breaks” has been introduced by campaigners and politicians to make their case. A break suggestes we are getting something others don’t.
Couldn't agree more Tricia.
Tax is an overhead, and customers pay the overheads .
It’s all about clearing out the decks for the big boys to take over how many times have I say it. They don’t care about the homeless they are creating it driving out LL’s. Check out their Sky high Sale, Service Charges or Rental prices 30/40% more, get rid of the competition.
And the bizarre thing is that because the Govt & tenants' groups both want to drive private LLs out they think they are working together. But once we are gone the tenants group will find we have just been replaced by big business not council houses! Some people seem to believe that we are suddenly going to see thousands of extra council houses, either built new or bought up by the council. What they don't realise is that councils have no money & have no desire to run housing - that's why they gave them to HAs.
Yes and just try and complain to big brother I mean business , careful what you wish for !!!
From my personal point of view taxation is the least of my worries, we are not highly geared, properties are jointly own and we are retired. I manage to get by without paying tax (just) and we live nicely on my wife's pension and rental income, my pension is on the back burner should we need it. EPC's and security of tenure are potentially bigger issues for us.
From my personal point of view taxation is my greatest worry.
I have been a landlord since 1997 and bought several of my properties before 2003.
Back then we paid standard Stamp Duty, were taxed on a profit figure derived in the standard way (rent minus expenses) and had taper relief on the CGT. I set up my business on that basis and while I have adapted my business model as much as possible to accommodate the numerous tax changes we've now reached a point where we have run out of road. I'm not highly geared but this is getting worrying now.
I predominantly like being a landlord. I like buying neglected properties and renovating them. I like providing well equipped homes for people who aren't ready to buy yet (students and young professionals) or people whose lives haven't quite gone to plan and are too old or poorly paid to get a mortgage. I like the human side of it, seeing tenants graduate, get job promotions, pass professional exams, move in with a partner, buy a house, have children, etc. I especially like seeing some of my UC tenants relax and feel settled in their homes. For some of them it's the most secure they have felt for years. They know I am a long term serious landlord and don't just do it as a bit of extra pension money or accidentally the way some people do when they can't sell a property.
The question is how long can I continue with the current level of taxation? Due to Section 24 if I increase rents sufficiently to cover even part of the mortgage increases I'll experience later this year I'm in danger of losing my personal allowance. I have no idea what my marginal tax rate will be. I read somewhere it could be infinite.
Selling one or two properties would probably help my personal tax position but when we're facing an unprecedented rental crisis does it really make sense to force out landlords who
A) like being landlords
B) rent to people on the margins who often don't pass referencing
Exactly my situation, which is why I may have to sell them all as they will never reach a C.
Wow, the NRLA have woken up to the fact that they will soon have no members as there will be very few private Landlords left. And certainly nobody buying in the private sector to let houses.
Talk about closing the door after the horse has bolted.
Bank of England putting up interest rates 11 times in a row I guess has been a surprise. These idiots will be putting the UK into a depression if they continue like this.
The only ray of light is that inflation should fall like a stone and it has very little to do with the muppets in the B of E.
Government need to turn it's attention to small businesses urgently. So many will go under unless action is taken and it will take years for this country to recover.
At the same time they need to have a close look at housing, as do Labour.
I agree that as a business we should be looked at differently as to a home buyer. That said, we should not be unfairly taxed and we should not be demonised.
Unfortunately I have so little faith in the 2 major parties that ONLY if I see meaningful urgent change will I change my mind to selling off my properties.
The way they have completely messed up housing in this country can't help but make you think what they are doing in other areas.
No wonder we have a boom and bust economy, despite Gordon Brown's promise all those years ago.
Look at the number of building companies that have gone bust ,! The number of British manufacturing companies that have gone bust
High streets full of charity shops. Companies like Debenhams looted, bankrupting itself and suppliers. The list is endless, we are still giving substantial resources and money to the EU!
Not a chance, a worthy effort but the public hate us and it suits the govt to have a whipping boy to deflect from their total lack of building social housing for the past 4 decades. This is the world we now live in and we all have to make our OWN decisions on if its worth the effort to stay in, Labour have already said what they will be doing when one of their ilk mentioned that they see no reason for all that '' unearned income '' that landlords make not be taxed............ god knows what that means but it won't be good that's for sure.
You're absolutely right Simon, it's been bad under the Tories, but it will be worse with Labour, in my view also.
We are the landlords with a small portfolio designed to supplement our pensions. Our issue is unquestionably the cost of raising our property EPCs to the level required. In our 70s, it is not a sensible investment and simply put we will not recover the costs in our lifetime. Added to that is that the costs are thousands and the savings for our tenants are hundreds so any savings for them will be wiped out by even modest rent increases. We have no issue with the principle of working to save energy costs - just that the expectation is impractical. What are we likely to do? Sell, of course. And the likelihood is there will be that small, but additional, dent in rental accommodation availability.
Excellent post and sums up the position of many of us.
Don’t forget the imminent damage being done by removal of Section 21, no hope of me buying anything again without Freehold rights, I am not going to share that with a prospective Tenant, while I supply him with a property.
BTL will become a niche market where only those who can a) afford the cost and b) guarantee not to cause problems, will have a chance of finding somewhere to stay.
For those landlords that are able to stay in the game it could actually make life easier in the long run as everybody will be vetted into oblivion and have to have guarantors. We will avoid anybody like the plague if there are any issues whatsoever in their past record instead of having to deal with issues from those with a less than perfect record that we took a chance on.
And if govt want to make housing in the PRS a human right and decide who we have to rent to, then we will vote with our feet and cash in, instead of continuing to work hard to provide the decent homes that govt has given up on providing.
I for one will not miss spending all day and a good deal of my money improving my properties and then all evening working instead of putting my feet up and relaxing with my other half. Even more so when my partial teachers' pension comes up in just over 5 years' time.
No doubt it’s much harder and more expensive for Tenants to find places already because of all the attacks by Authorities & Shelter etc on the PRS.
Its going to be even harder for Families from what I read, some L’don Borough’s are now making houses let to families Licensable, isn’t this the main reason for letting to families at all.
I have read each and every one of your comments on here and I believe that you are ALL spot on in your views and opinions.
I am guessing that most of you are over 50 years old? The reason I ask this is because most younger landlords (like me) don’t make the time to read these articles as they are too busy or have a main job which is for their daily income.
The reason I write this is because I believe that most of ”new to the market” landlords have property as a supplementary income and use this to either top up their wage, have as a pension or similar.
Landlords like yourselves, and me, have all been doing this for more than 2 decades and understand there is “no get rich quick” method in the rental game and are in it for many reasons (most are written in above comments) and we feel very frustrated when these tough legislations and taxes continue to bombard us from all angles.
I understand and empathise with each and every one of you as I too have been doing this for over 20 years now (I’m 44) and only rent 5 houses as my only income and future pension.
You are all so right in what you are saying and sadly it will only fall on deaf ears. The government and local councils will continue to turn tenants against us even though the majority of landlords are decent people. I will be continuing in the game and riding the wave but I will not be investing any more in residential property.
Good luck all and I wish you all well in whichever avenues you take.
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