The normally under-the-radar Royal Institution of Chartered Surveyors has made an unusually outspoken plea to the government to help landlords.
In particular, RICS wants landlords to be given cash help and policy clarity on future energy efficiency regulations.
In its latest monthly market snapshot its senior public affairs officer, Sam Rees, says: “Ahead of the UK budget on 15 March, RICS is emphasising the critical role housing has to the UK economy, and the need to boost supply through new builds and commercial property conversions where appropriate whilst conforming to the strictest standards.
“RICS supports efforts to improve the energy efficiency of homes and the continuation of the government’s Energy Price Guarantee. Further fiscal intervention for consumers and businesses is required to scale up the retrofitting of UK homes and we welcome initiatives such as ECO+ that go some way in delivering such needs.
“With rising rents and diminishing housing stock in the private rental sector, the government must do more to support landlords who are leaving the market due to increasing cost and regulation challenges.
“Landlords continue to raise concerns with RICS on the lack of clarity and financial support from government to meet expensive energy efficiency improvement targets which is further pressuring landlords into exiting the sector.
“RICS would also encourage the government to restore the Local Housing Allowance to the 30th percentile to support those private renters who are struggling with rising rents.”
In terms of the immediate lettings market, the new RICS snapshot shows tenant demand continuing to increase with a net balance of 32 per cent of surveyors reporting a rise.
The snapshot also says: “Significantly, landlord instructions continue to decline, although at a lesser pace than in the recent months at minus 13 per cent. Inevitably, given the ongoing imbalance, the headline rent expectations reading remains at a relatively high level of 45 per cent. Moreover, this pattern is repeated across much of the country.”
Elsewhere in the RICS report, there appears to be some sign that the housing market sales downturn may be less severe than many have expected.
This reassuring prospect is also evident in some of the anecdotal remarks from survey participants stating how a more optimistic February has given the housing market some hope for the coming months after a sluggish start to the year.
Most significantly, the headline reading for ‘new buyer enquiries’ rebounded to a net balance of minus 29 per cent - much better than the minus 45 per cent recorded in January. While this metric is still signalling a decline in demand, and represents the tenth consecutive negative monthly reading for new buyer enquiries, it is also the least negative result since July 2022.
The ‘new sales’ indicator was also less negative in February, improving from a net balance of minus 36 per cent to minus 26 per cent. However, the average time taken to complete sales continues to rise and is now approaching 19 weeks.
In an additional question included in the latest survey, RICS analysed the difference between the asking price and sales price in the current macro climate.
In the mainstream market (covering prices up to £500,000), around 60 per cent of surveyor respondents suggested that prices were being agreed at below the asking price.
For properties priced between £500,000 and £1m, the share jumped to just over 70 per cent.
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This government are simply incapable of dealing with all that is before them, Labour will take over in 2024 😱😱 then we really do have problems 🤔🤔
With so many good tenants to choose from, why take DSS claimants no matter how generous their benefits from the taxpayers?
Help from government ? I won't be holding my breath
They’re following orders ,you’ve got to be stupid not to realise it all now
Voting is pointless as all politicians are bought and paid for by the wef
We really need a peasant revolt
With the BoE still talking about interest rate rises it's unlikely many people will want or be able to get a mortgage for anywhere close to the amount they need. Basic lending criteria means either huge pay rises or huge price drops would be needed. Most homeowners can't move if they can't sell their current home for enough to clear the mortgage and pay the fees so we will have a few years of people being trapped in their current home.
After Sunak artificially overheated the market with all his Stamp Duty holidays it was inevitable it would grind to a halt at some point. Maybe he was too inexperienced and divorced from reality to understand what would happen when interest rates rose? I guess it doesn't have much impact personally when your wife is a billionaire.
So with the owner occupier market at a standstill the only way to rapidly improve people's housing options is to boost the rental availability.
As building sites are on a slow down and planning permission takes years for Build to Rent, that means ending the war against the PRS. A good starting point would be to scrap Section 24 and refund all the extra tax we have paid since it was introduced. Give us a 50 year guarantee that we won't be taxed differently to other industries again. That tax refund (of money we should never have paid) would give us various options. Some would use it to buy more houses, others would use it to improve the EPC scores of what they were planning to sell. Others may go on a cruise or buy a sports car.
Next would be to introduce zero CGT after so many years of ownership. In France it's 22 years for most of it and 30 years for the social charges element. In Germany I believe it's 10 years. Actually give us a reason to remain as landlords and a clear exit route to encourage new landlords into the industry. It wouldn't cause a mass stampede but would allow us to gradually ease into retirement if we want. It would certainly incentivise some to hang on in the industry for a few more years. It wouldn't even cost the government much because with CGT at 28% we simply aren't going to sell. 28% of nothing is zero. If we sold they would get the SDLT from the purchaser and VAT on the conveyancing.
Class BTL as a business not unearned investment. One rental property may be accidental but when someone has 3 or more it is most definitely a business. Allow us to pay some of our earnings into a SIPP and enjoy the tax relief EVERYONE else can receive.
LHA isn't fit for purpose and needs to reflect local rents. The BRMAs are too big so don't produce figures that reflect rents in areas of good employment availability. Here the choice is live somewhere close to work and pay £250 a month over LHA in rent or live nearly 30 miles from work, spend £100 a month more than LHA on rent and £100 on travel to work costs plus extra childcare. Or just be unemployed and hope to get endless Discretionary Housing Payments to pay the shortfall.
The extra 3% SDLT could also be scrapped or at least refunded after maybe 5 years if the property is being used as a BTL.
Then we need certainly in other areas such as EPCs, Section 21 and the whole Rental Reforms White paper. It's impossible to make rational business decisions while in limbo.
As usual you have set out all the issues clearly and logically, I just wish you were housing minister :)
Jo, really excellent post, I too wish you were housing minister. I hope you send the post to your MP! I will certainly be sending it to mine.
Jo, very good in other words just reverse everything they have done in recent years to damage the Private Rented Sector, that is the root cause of homelessness.
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