NRLA: Government policy has fuelled supply crisis

Government efforts to dampen investment in rental housing are fuelling a supply crisis, hiking rents and making homeownership more difficult to afford, the National Residential Landlords Association has warned.

To change the situation the association said the stamp duty levy should be scrapped to encourage more landlords to increase the UK’s supply of rental stock.

Since 2015 the government has introduced the 3% stamp duty surcharge and restricted mortgage interest relief to the basic rate of income tax.

Now demand is higher than supply, as data from research consultancy BVA/BDRC for the NRLA found that 62% of private landlords in England and Wales report heightened tenant demand in Q1 2022 – a record high.

Over the same quarter more landlords (11%) sold property than purchased new property (8%), making the supply crisis even more acute.

Ben Beadle, chief executive of the National Residential Landlords Association, said: “Ministers have been repeatedly warned of the damage that would be caused if they continued to attack the private rented sector.

“The supply crisis is completely counterproductive to the government’s mission to turn renters into homeowners. By suppressing supply whilst demand increases, with rents going up as a result, they continue to make it harder for tenants to save for a home of their own.

“The Chancellor needs to wake up to a crisis of the government’s own making, scrap the tax on new homes to rent and review other measures which add to a landlord’s costs.”

Given that renting privately is the first housing tenure most young people enter when they leave home or university, demand is expected increase.

This is because the 15-24 cohort in the population is forecast to grow between now and 2030 by 866,000 (11%).

Amidst the supply crisis, official data shows that private rents across the UK increased by 2.4% during the first quarter of 2022.

This was the largest annual growth in rents since July 2016, although still much less than inflation which stood at 6.2% over the same period.

The NRLA is calling on the government to scrap the stamp duty levy on the purchase of additional properties. According to Capital Economics, removing this would see almost 900,000 new private rented homes made available across the UK over the next ten years.

As a result of increases in income and corporation tax receipts, the modelling suggests this would lead to a £10 billion boost to Treasury revenue over the same period.

Comments 1

  1. They never go and ask the hundreds of thousands of Benefit tenants why they can’t get a house.

    If they did and found out why by coming to ask us the Landlords, they would actually be relaxing the rules to increase supply which will reduce rents and improve conditions. How can they keep getting it so wrong.

    Cause they in a cycle of Ooh must protect that naughty tenant who’s being evicted, we’ll worry about the thousand other tenants who now can’t get a house cause we’ve stopped this landlord having his house back.

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