Tenants in the private sector tenants face being squeezed as the number of homes to rent falls.
According to data published today, the number of homes for private rent in England fell by 46,000 between March 2016 and March 2017. This was the first year a three per cent levy on stamp duty for the purchase of buy to let homes came into effect and the final year before the Government began its phased reduction in mortgage interest relief for the sector to the basic rate of income tax.
The fall in supply comes as recent figures from the Association of Residential Letting Agents have shown an increase in demand for private rented homes. It also follows a speech by the Prime Minister in March launching the new National Planning Policy Framework in which she argued that “rents come down” when “supply goes up.”
In a frank assessment, David Miles, Professor of Financial Economics at Imperial College London and a former member of the Bank of England’s Monetary Policy Committee has previously warned that “aspiring first-time buyers are hardly helped by squeezing the supply of rental property and driving rents up.”
The RLA’s Policy Director, David Smith, commented:
“Today’s figures show that tax hikes on the sector are choking off supply and making it difficult for prospective tenants, many of whom cannot afford to buy a home of their own, to access the homes to rent they need. At the same time that the Ministry of Housing has published its corporate plan in which is pledges to support the delivery of 1 million homes by 2020 this is hardly an auspicious start.
“Delivering homes just for those who can afford to buy is not a policy which meets the needs of many less fortunate households in the UK. With corporate investors still accounting for only two per cent of the private rental market it is time to develop pro-growth taxation that supports the majority of landlords who are individuals or small businesses to invest in the new homes to rent we desperately need.”