Government policy has broken the private rented sector in the East Midlands as figures show that the number of homes in the market continues to shrink despite a substantial spike in demand, reports the National Residential Landlords Association.
Since 2015, the Government has embarked on a deliberate effort to discourage investment in private rented housing. This has included measures to restrict mortgage interest relief and imposing a three per cent stamp duty levy on the purchase of homes to rent out. Reports suggest the Chancellor may increase Capital Gains Tax in his Autumn Statement, which in fact did occur stealthily by reducing the thresholds by 75% over the next two years.
Michael Gove, argued that shrinking the private rented sector would help more people become homeowners, harking back to the Thatcher ideology that failed then and is failing now. Official figures show that the number of households in the private rented sector has fallen by over a quarter of a million over the past five years. However, demand from prospective tenants continues to soar, with students among those scrabbling to access a dwindling number of properties.
According to both Rightmove and Zoopla so far this year the demand for private rented housing in the UK is up whilst the supply of such homes has fallen. The NRLA has found that in the third quarter of the year 65 per cent of landlords reported that the demand for private rented housing had gone up.
Local authorities have also raised concerns that the flight of housing out of the private rented sector puts extra pressure on already lengthy social housing waiting lists. The trend of ever-increasing demand takes place despite the number of owner-occupied households in England having increased by over one million in the past five years.
Ben Beadle, Chief Executive of the NRLA, said: “The Government’s strategy for the private rented sector lies in tatters. The fact that the supply of homes to rent is falling despite an increase in demand is a damning indictment of tax decisions which serve only to increase rents and make home ownership more difficult to achieve.
“Further tax hikes on the sector risk making an already bad situation worse. Ministers need to recognise that a healthy and vibrant private rental market needs to sit alongside, rather than be in competition with, efforts to support homeownership.”
With immigration out of control and mortgage costs rising significantly the demand for rental properties will continue to rise and hotels are not the answer to any of these issues. Build to Rent is a slow burn and not attractive in smaller conurbations so the private rental sector is crucial to solving these issues. Meanwhile landlords continue to be persecuted by all political parties and continue to exit the market, further exacerbating the housing dilemma. Until politicians wake up and smell the coffee the issue will continue to spiral out of control.
If you operate in the private rented sector in the East Midlands and looking for a solution to these issues, then contact us to discuss what options are open to you.
