Chief executive says that the supply crisis was caused of the government's failed policies
The National Residential Landlords Association (NRLA) had called upon the government to take action on a worsening rental supply crisis.
Data published by Rightmove, a real estate company, showed that an average of 25 people enquired about each available home.
“Tenants are bearing the brunt of the supply crisis in the rental market. This is a result of failed Government policies,” said Ben Beadle, chief executive of the NRLA.
The worsening rental supply crisis
In an article, the NRLA noted that Rightmove’s data showed that rents in London had increased by 5.9% and 5.5% in the UK in the year to August 2023. At the same time, the inflation rate was at 6.7% as the average monthly pay increased by the same rate.
“The Government must take action to stem the loss of rental properties across the country. The Treasury needs encourage investment by reversing the damaging tax hikes which penalise landlords who provide much-needed housing,” said Beadle.
“It’s also crucial that the Government makes clear assurances that landlords who make legitimate possession claims will not become mired in a broken court system once section 21 evictions are abolished.”
Tax changes that affected the private rented sector
In July 2015, George Osborne, the Chancellor at the time, announced that the mortgage interest relief for private landlords would be restricted to the basic rate of income tax to create an equal playing-field for people buying a home to let and those who were buying a home to live in. However, this was eventually disproven.
“If you buy to let, you pay income tax on the return and capital gains on what comes out when you sell it at the end, which is not the case for owner-occupiers. The current system is clearly more tax favourable towards buyers and owner-occupiers than it is towards buy-to-let landlords and renters,” said Paul Johnson, director of the institute of fiscal studies.
The changes in mortgage interest relief has incentivised the provision of short-term over long-term rentals as it is not applicable to furnished holiday lets.
In November 2015, Osborne also announced the introduction of a 3-percentage point stamp duty levy on the purchase of homes which were going to be rented out. This was made so those who bought a home to let would not squeeze the finances of families who could not afford to buy a home.
However, a report of the London School of Economics found that only a minority of sales to landlords had involved bids from both investors and private owner-occupiers. This had challenged the argument that landlords were pushing other buyers out of the market.
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