The Government’s commitment to expanding social housing, announced last week, is a positive step, especially for those tenants who are struggling to access accommodation in the private rented sector amid the unintended consequences of the Renters’ Rights Act (RRA).
For many years, the PRS has housed those who should really be within the social housing sector – tenants on low incomes, those with more complex needs – but there simply hasn’t been the capacity, so private landlords have stepped in.
Unfortunately, anecdotal evidence we hear from the market is that some of the fears relayed to Government ahead of the introduction of the RRA are unfortunately coming true. It is those tenants on lower incomes or with more complex housing needs who are finding it more challenging to secure rented accommodation.
The Government’s commitment to invest billions in more than 70,000 new social and affordable homes is therefore a welcome step, particularly for families in temporary accommodation and those who cannot find a secure home at a price they can afford.
The emphasis on social rent and renewed council housebuilding should help relieve pressure at the lower end of the housing market, but delivery will take time and the PRS will continue to house millions of people who cannot access social housing.
Andy Burnham talks of a 10-year window and we all know the challenges of getting spades in the ground to kickstart some of these schemes. This will not be a quick fix and private landlords will continue to house tenants who would benefit from being in the social housing sector for many years to come.
Government must therefore pursue a balanced housing strategy that supports new social homes while recognising the essential role of responsible private landlords in meeting immediate and longer-term demand.
With a Budget on the horizon, that should mean no punitive measures aimed at the landlord community – wishful thinking I know! We still have the increase in tax on rental income for those outside of a limited company due to come in next April, while the 2024 Autumn Budget increased the Stamp Duty surcharge, creating an additional barrier for fresh investment into the sector.
There has been talk of an increase in Capital Gains Tax, but I would suggest that measure would simply stymie the market and discourage sales, but we have seen no other kite flying of potential measures yet, which I hope remains the case given the impact this has on investment behaviour.
Beyond the Budget, landlords are facing the next phases of the RRA and, of course, new energy efficiency requirements, mooted for October 2030, although we have no detail on what EPC reform will land on and the 2030 deadline is not set in legislative stone.
Add in the usual challenges of operating a property portfolio – tenant arrears, damage to property, voids – and it’s clear that landlords have a lot on their plate. Recognising this, alongside acknowledging the important role they play in housing tenants that should really be in the social housing sector, would be a welcome move from our policymakers.
The social housing move is genuinely welcome and Andy Burnham’s Government does appear to be putting fire under some of the policy areas that drifted under the previous administration.
Let’s hope new council homes start to be delivered with pace, but in the meantime, let’s also protect the PRS that is playing such an important role in providing homes to these households.
Louisa Sedgwick is Managing Director of Mortgages at Paragon Bank
