RLA News Service

One of the country’s leading landlords’ organisations is calling on Ministers to adopt the recommendations of today’s report by the Communities and Local Government Select Committee to boost investment in rented housing.

Recognising that the rental market is dominated by small companies and individual landlords, MPs on the cross-party committee have called for the Government to consider enabling Self Invested Pension Plans to invest in new property and to bring forward proposals to “simplify the tax and regulatory structures that apply to private landlords.”

Commenting on the report, Alan Ward, Chairman of the Residential Landlords Association said:

“The crisis in the private rented sector shows no signs of abating. Faced with a chronic shortage of accommodation, many tenants are faced with too high rents and are left to simply accept whatever housing they can find.

“This report echoes the arguments we put to the Committee and are putting to Government to reform the regulatory and taxation system which is stifling new investment in the sector. The proposals we have suggested would help unlock renovation in run down properties bringing them back into supply and lead to new homes being provided for let.

“We strongly welcome the support given in principle to this by the report and urge Ministers to act on its recommendations.”

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The RLA represents over 15,000 private sector residential landlords in England and Wales.

The Communities and Local Government Select Committee today publishes its report on financing new housing. In relation to the private rented sector it recommends:

All public bodies, both local and national, should consider the potential for contributing their land alongside institutional finance to support build-to-let initiatives.

Local authority pension funds should be alert to the benefits of investment in residential property, whilst ensuring transparency and security for their investors. The committee hope that their doing so would pave the way for private funds also to invest in residential property.

Encouraging local authorities to consider taking a flexible approach to affordable housing requirements in planning obligations on a case-by-case basis, where this will help to stimulate build-to-let investment and will not be to the detriment of the wider housing needs of the area.

The Government should put in place measures to address concerns about the distinction between trading and investment specifically in the context of residential REITs. It further recommends that the Government allow the creation of private, unlisted residential REITs.

The Government should look in detail at the contribution SIPPs could make and the risks and benefits for those investing in SIPPs. If satisfied about these risks and benefits, it should bring forward proposals to facilitate their investment in residential property.

The committee goes on to write:

“While it is right to consider the potential for large institutions to invest in the private rented sector, it is also important to remember that the sector is, and will continue to be, dominated by small companies and individual landlords. Although these smaller landlords tend to invest in existing property, they do make an indirect contribution to new housing supply, and in the past have provided upfront funding for development by buying property ‘off-plan’. There are a number of issues facing those in the sector: the financial crisis had a significant effect on the availability of buy-to-let mortgages; many landlords no longer have the benefit of capital gains; and there is some concern about the levels of return. We have heard that the burden of regulation and taxation has deterred landlords from expanding their businesses. While constraints on mortgage finance will continue to affect investment in the sector, the Government could provide some support by taking steps to address this burden. We recommend that the Government bring forward a set of proposals to simplify the tax and regulatory structures that apply to private landlords. These proposals should aim to create an environment in which small private landlords are encouraged to expand their portfolios and invest in new build housing.”

For further information please contact the RLA’s consultant, Ed Jacobs on 0113 278 0211 or email ed.jacobs@publicaffairsco.com or Alan Ward on 07764310325 or email award@rla.org.uk.