The next Prime Minister needs to make it a priority to boost the UK’s supply of rental properties, the National Residential Landlords Association has warned.
Trade minister Penny Mordaunt is currently favourite to be the next PM, followed by former Chancellor Rishi Sunak and foreign secretary Liz Truss.
The NRLA’s warning comes after research from BVA/BDRC found that 23% of landlords plan to cut the number of properties they let in the next 12 months, up from 20% a year ago. Only 14% plan to increase the number of properties they let.
The Renters Reform White Paper released in May proposed a number changes to the market, including scrapping Section 21 evictions and introducing periodic tenancies.
While landlords were given a boost with the announcement of a new ombudsman to resolve tenant disputes, it seems some are looking to take a step back from the market rather than adapt to the changes.
Ben Beadle, chief executive of the National Residential Landlords Association, said: “The last six years prove that it was a nonsense to think that cutting the supply of rental housing when demand is so strong would make it easier for those saving for a home of their own.
“Driving rents up just leaves tenants with less cash to save for a deposit.
“We need a strong and vibrant private rental market that meets the needs of those who rely on the flexibility it provides, those who need somewhere to live before becoming homeowners and those for whom the promise of social housing tomorrow provides cold comfort today.
“The next administration needs to reset its plans for the sector.”
Against this picture of falling supply, 60% landlords in England and Wales saw increased demand for rental housing in the second quarter of the year. This represents a large increase on the 39% of landlords who reported increased demand a year ago.
With the demand for rental housing outstripping supply, private rents across the UK rose by 2.8% in the year to May this year, the largest annual growth since January 2016. However, this is dwarfed by house price increases that have occurred at the same time.
The District Councils Network found that three quarters (76%) of the councils it surveyed have warned that a rise in landlords leaving the sector or converting properties to holiday lets has led to longer waits for council housing.
The NRLA suggested that the trend is a direct result of government policy and punitive tax increases since 2015, which have shrunk the private rented sector.
Since the Government began to restrict mortgage interest relief for landlords, the number of private rented homes in England has fallen by over a quarter of a million.
In stark contrast, those providing holiday lets continue to enjoy full mortgage interest relief, creating a distortion in favour of short-term housing over longer term rentals.
The NRLA is calling on the next Prime Minister to end this hostility to landlords and take steps to encourage investment to meet the rising demand.
Research by Capital Economics suggests that just removing the stamp duty levy on additional properties would see almost 900,000 new private rented homes made available across the UK over the next 10 years. This would lead to a £10 billion boost to government revenue through increased tax receipts.