With a fall in the number of homes available to rent, private sector tenants are finding rents are rising, with fewer options to choose from.
According to data published yesterday by the Ministry of Housing, Communities and Local Government, the number of homes in England available for private rent fell by 46,000 between March 2016 and March 2017. This was during the first year that the 3% Stamp Duty surcharge for the purchase of additional buy to let properties came into effect, as well as the final year before the Government began phasing in a reduction in mortgage interest relief for the sector to the basic rate of income tax.
This information about the fall in supply comes as recent figures from the Association of Residential Letting Agents (ARLA) have revealed an increase in demand for private rented homes. It was also in March that the Prime Minister made a speech regarding the launch of the new National Planning Policy Framework. In the speech she argued that “rents come down” when “supply goes up.”
A warning has previously come from David Miles, Professor of Financial Economics at Imperial College London and a former member of the Bank of England’s Monetary Policy Committee, stating that “aspiring first-time buyers are hardly helped by squeezing the supply of rental property and driving rents up.”
David Smith, Policy Director for the Residential Landlords Association (RLA), has commented: “Today’s figures show that tax hikes on the sector are choking off supply and making it difficult for prospective tenants, many of whom cannot afford to buy a home of their own, to access the homes to rent they need.
“At the same time that the Ministry of Housing has published its corporate plan in which it pledges to support the delivery of one million homes by 2020, this is hardly an auspicious start.
“Delivering homes just for those who can afford to buy is not a policy which meets the needs of many less fortunate households in the UK. With corporate investors still accounting for only two per cent of the private rental market, it is time to develop pro-growth taxation that supports the majority of landlords who are individuals or small businesses to invest in the new homes to rent we desperately need.”