The next Prime Minister must tackle the supply crisis in the private rental sector if homeownership ambitions are to become a reality, warns the National Residential Landlords Association, as new survey data shows that the supply of rental housing is expected to continue to decline over the next year. .
According to this study, carried out by BVA-BDRC, 23% of landlords said they planned to reduce the number of properties they rented over the next 12 months. It’s 20% a year ago.
In contrast, only 14% say they plan to increase the number of properties they rent, unchanged from the same point last year and down four points from the first quarter of 2022.
Against this backdrop of falling supply, 60% of landlords in England and Wales reported increased demand for rental accommodation in the second quarter of the year. This is a big increase from the 39% of owners who reported an increase in demand a year ago.
With demand for rental accommodation outpacing supply, official data revealed that private rents across the UK rose 2.8% in the year to May this year, the fastest growth annually since January 2016.
This latest survey confirms recent evidence of declining supply from other organisations, including the District Councils Network. 76% of councils surveyed warned that an increase in landlords leaving the area or converting properties into holiday rentals has led to longer waits for social housing.
The NRLA warns the trend is a direct result of government policy and punitive tax increases since 2015, which have squeezed the private rental sector.
Since the government began to restrict mortgage interest relief for homeowners, the number of privately rented homes in England has fallen by more than a quarter of a million. In contrast, those offering vacation rentals continue to receive full mortgage interest relief, creating a bias in favor of short-term accommodations over longer-term rentals.
The NRLA is calling on the next Prime Minister to end this hostility towards landlords and take action to encourage investment to meet growing demand.
Research from Capital Economics suggests that simply removing stamp duty on additional properties would see nearly 900,000 new privately rented homes available across the UK over the next ten years. This would lead to a £10 billion increase in government revenue through increased tax revenue.
Ben Beadle, chief executive of the National Residential Landlords Association, said: “The last six years prove that it was absurd to think that reducing the supply of rental accommodation when demand is so strong would make it easier for those saving for their own accommodation. Raising rents simply leaves tenants with less money to spare for a deposit.
“We need a strong and vibrant private rental market that meets the needs of those who rely on the flexibility it offers, those who need housing before becoming homeowners and those to whom the promise of he social housing of tomorrow offers cold comfort today.
“The next administration must revise its plans for the sector.”