“The demand for private rented housing is continuing to grow, with 3.4m tenants living in the private rented sector – an increase of over one million tenants since 2005.
“Increasingly the private rented sector is being asked to take on the weight of would-be first time buyers who have been priced out of the market by rising deposits and the lack of available mortgage finance.
“This is a situation which will be exacerbated by the imminent end of the stamp duty holiday.
“But with 55% of ARLA members stating that they are seeing more tenants than properties, something needs to be done to help boost the number and availability of homes in the sector.
“We believe that the tax system could be used by the Government to encourage investment in housing stock in the private rented sector and therefore improve the conditions in which those millions of tenants live.
“The forthcoming Budget therefore represents an open goal for the Chancellor to encourage investment in the UK’s private rented sector and support growth in the economy.
“We would urge the Government to back enterprise in the private rented sector and remove prohibitive barriers to further investment.
“To stimulate such investment, we suggest rented property should be treated as ‘entrepreneurial business activity’ for capital gains tax purposes.
“This could be done without affecting any alternative treatment for second homes, simply by insisting that it is restricted to let property, as evidenced by a written tenancy agreement, and that it has been let for a minimum period of time.
“Council Tax records would also provide proof of rental.
“We also believe that the Government needs to address the issue of housing supply as a matter of urgency.
“2010 saw the lowest number of houses being built since the Second World War. Yet it is widely agreed that in the region of 250,000 additional homes need to be built per year to meet current demand.
“Whilst the New Homes Bonus and changes to the Community Infrastructure Levy will provide welcome incentives for local authorities to approve house building schemes, past experience shows us that the Government must work harder to encourage the levels of house building required.
“And, early indications show that the financial incentives offered through the New Homes Bonus may not be enough to force local authorities to encourage additional house building in their area.
“Furthermore, one of the risks of basing housing policy largely on this kind of incentive is that urban councils will bring forward sites for development so that they can benefit from the funding available, whereas the more prosperous leafy suburban and rural councils may not, for fear of nimbyism.
“To ensure these recommended changes can be effectively adopted and disseminated within the sector, ARLA will continue to push for the mandatory government regulation of the private rented sector.
“In the absence of a Government-run scheme, ARLA has introduced a licensing scheme for its members. We believe this scheme provides the most effective protection for consumers currently on offer.
“However, there are still a significant number of unregulated estate and letting agencies operating across the UK- many of which do not adhere to basic standards.
“This situation can leave some tenants exposed to ‘rogue’ landlords and without sufficient monetary protection, meaning reform should be a primary concern.”
