Property industry figures are calling for action to prevent a critical shortage of rental stock in the buy-to-let sector. They say that unless the government acts, there will be an exodus of landlords from the private rental market. Such a scenario would reduce the number of properties available to rent – making it even tougher for tenants to find a decent place to live – and drive up the cost of renting.
Renters and landlords feel the squeeze
Landlords sold up in their droves last year, with 70,000 exiting the buy-to-let sector in 12 months.*
At the same time, rents increased, with prices in 48 council areas now classified as unaffordable when compared with average wages.**
So if rents are going up and not down, why are landlords quitting the market? Many BTL investors are struggling due to rising interest rates, increased red tape and changes to the tax system. They just can’t make the sums work, so they’re walking away from the sector.
And what is the long-term impact of such a trend? Fewer landlords mean fewer rental properties. So, if you’re not in a position to buy your own property (and with mortgage costs the way they are, fewer people can), then your options are reduced.
Tenants are a diverse bunch, ranging from students and recent graduates to families and people in their sixties and seventies. A dramatic change in the structure of the housing sector would only create an even greater imbalance and leave tenants more exposed.
Petition calls for change
Midlands landlord Simon Foster has started a petition demanding the reinstatement of tax relief for landlords (this type of relief was scrapped by the Cameron government).
The petition calls “for landlords to be allowed to offset the full amount of mortgage interest against rental income before tax is calculated”. Such a measure would mean landlords are taxed on their profits, not their turnover, and slow down the decline in landlord numbers.
More than 31,000 people have already signed the petition, which has been backed by industry figures, including Maxine Fothergill. If 100,000 people sign, the issue will be debated by MPs in Parliament.
If you would like to sign the petition, you’ll find it here: https://petition.parliament.uk/petitions/627785
From all of us here at Chamberlains, thanks for reading.
2023 Copyright – Estate Agent Content Club – Permission to share granted.
* Accountancy firm UHY Hacker Young
** Office for National Statistics