About 133,000 homes could be lost to the UK private rental sector in the next 12 months, according to new research. The stark figures have been released by the Residential Landlords Association research group, PEARL, after it surveyed 2,600 landlords. It comes as no surprise that tax changes, stamp duty hikes on second homes and regulatory changes are the biggest reasons why landlords are selling up. Demand is stable and is expected to increase, as fewer people find home ownership appealing. In the survey, 84% of landlords said that demand from tenants is increasing or stable at the very least. However, it is forecast that 133,000 homes will be lost and that around 46,000 privately-rented homes have already been lost.
RLA policy director, David Smith, said that it was a mistake for the government to set properties to own and homes to rent in opposition to one another rather than setting out a policy to provide more homes for everyone, including owners and tenants.
The vast majority of UK landlords are individuals who either own a portfolio of properties which they professionally run or have one or two properties to make a small income. According to the PEARL research, only 2% of buy-to-lets are owned by corporate investors, and the rest are owned by individuals and small businesses. These tax changes are hitting them hard and, for many, it is no longer viable to invest in rental properties. Previous research has shown that more than 6 out of 10 landlords thought their investments’ profitability would fall by at least 20% and 67% said they are thinking about reducing their investment because of the tax changes.
To stop this exodus of landlords, the RLA is calling for the government to make smart tax policies which will support these private landlords in their bid to provide long-term properties. The RLA is calling on the government to stop the tax on new homes. The association feels that the 3% levy should not apply to landlords who are investing in properties which add to the housing supply. RLA senior researcher, Dr Tom Simcock, said the private rental sector needs reforming, but in a fair way which benefits both landlords and tenants. He argued that the tax policy should be reformed so that it supports rather than penalises private landlords. He also felt that the idea of three-year tenancies could benefit both parties under the right circumstances.
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