86% of landlords have no plans to increase their rental portfolio
Figures published by the Royal Institution of Chartered Surveyors (RICS) on 4 October 2016 revealed that 86% of landlords had no plans to increase their rental portfolio during the year, and that the trend was set to remain for the next five years. In addition, 58 per cent of RICS estate agents reported a drop in buy-to-let sales since May. Ref Get out your hard hat Theresa: UK facing a 1.8m shortage of rental properties.
This came at a time when the number of UK households renting property doubled from 2.3 million in 2001 to 5.4 million in 2014, and it was predicted that 1.8 million more households will be looking to rent, rather than buy by 2025.
However, government policy has dampened the demand for buy-to-let investments by making changes to the Stamp Duty (SDLT) threshold and scrapping landlords’ right to deduct mortgage interest from their income tax bill.
RICS urged new Prime Minister Theresa May to abandon David Cameron’s focus on home ownership, reverse April’s Stamp Duty measures and take a bolder. long-term approach to the build-to-rent sector. It called for pension funds to be incentivised with tax breaks to build large-scale rental properties with affordable elements and proposed that local authorities should be encouraged to release brownfield land.
Helen Gordon, Chief Executive of Grainger plc commented, “We have an ambitious plan to invest over £1 billion by 2020 in high quality, long term rental housing. In order to support us in this ambition and many others with similar plans, the Government should recognise the important role we have to play and explicitly support build-to-rent in its policies. Importantly, the Government could ensure the planning system and regulatory red-tape does not hold back investment, and it should ensure that it does not inadvertently penalise large scale investors through tax measures such as the SDLT 3% surcharge on second homes, which discourages large scale, institutional support for new rental homes in the UK."
She suggested that build-to-rent can:
- Increase housing supply.
- Deliver more quickly than other traditional house-building models.
- Contribute to town centre regeneration.
- Provide a better deal to customers.
- Support greater flexibility in the labour market.
Jeremy Blackburn, RICS Head of UK Policy commented “We are facing a critical rental shortage and need to get Britain building in a way that benefits a cross section of society, not just the fortunate few. Our latest figures show that there has been a 15% decline in house sales to first time buyers over recent months. That tells us that for all the rhetoric, David Cameron and George Osbourne’s Starter Homes Strategy failed to get off the ground.
“The Private Rented Sector became a scapegoat under the previous Prime Minister, and because of that it suffered. Yet with increasingly unaffordable house prices, the majority of British households will be relying on the rental sector in the future. We must ensure that it is fit for purpose, and the Government must put in place the measures that will allow the rental sector to thrive. Any restrictions on supply will push up rents, marginalising those members of society who are already struggling.”
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