Today marks 30 years since Nigel Lawson, as Chancellor of the Exchequer, outlined tax reforms to encourage investment in private rented housing.
That year saw the Thatcher Government bring in the Housing Act 1988, which included the introduction of the Assured Shorthold Tenancy along with Section 21 repossession powers and the deregulation of rents – all of which went a long way to opening up the rental market.
Delivering his budget in 1988 Lawson went one step further offering tax breaks to encourage people to invest in property to let.
He extended the Business Expansion Scheme, which offered full tax relief to people investing in non-public UK firms, to include companies specialising in residential lettings – limiting investment at £5m a year, with the scheme for five years, until 1993.
He said the move would help tackle the shortage of private rented accommodation, which was an obstacle to labour mobility, vowing: “This change will powerfully reinforce the impact of decontrol in reviving the private rented sector of housing in Britain.”
Now, three decades on, and with another Conservative Government in power much has changed, with landlords hammered by the taxman and facing ever-increasing regulation.
Here RLA Chairman Alan Ward looks back and reflects on how the sector would benefit from a return to the spirit of ’88.
He said: “It is almost impossible to describe the extent to which things have changed in the 30 years since Lawson made his speech.
“This was the flowering of Thatcherism in a deregulated market.
“This model seems to have been forgotten because all the Government wants to do now is to impose more and more regulation on the private rented sector.
“We now have another Conservative Government, yet what they are doing seems to fly in the face of Conservative philosophy, which is to encourage individuals to look after themselves and their own futures – to be independent of the state.
“While this Government is following Osborne’s initiative to encourage corporate investors and Build-to-Rent, it is clear that this market is not producing the volume that is required.
“There is an inertia there. It takes a long time to get planning permission and get homes built – sometimes years.
“Meanwhile for most of the 30 years since Lawson, private landlords have invested in and created three in five of ALL new homes, either by taking large redundant properties and dividing them, or buying off plan, which is important in terms of raising finance for housing developers.
“Private landlords have been prepared to buy property and provide homes to rent – and at no cost to Government – indeed we are net contributors in tax terms.
“Tories have always had an obsession with home ownership, but by encouraging Built-to-Rent they are backing both horses.
“We have go to overcome the idea that rental homes re second best – they are not.
“The Government needs to take a step back and look at what is actually happening out there, look at who is providing tenants with the homes they want and need and adjust their policies accordingly.
“This country’s private landlords are facing an uphill battle, demonised by the press and with a Government that seems determined to force them out of the market with draconian tax changes and unnecessary red tape
“PRS landlords are providing homes to a fifth of the population, with the country needing a further 1.8million more homes to rent by 2025.
“History shows us who is most likely to be providing them.”