With the number of homes coming up to let in short supply, Propertymark is calling on governments across the UK to reconsider the way landlords are taxed in a bid to encourage greater investment in the buy-to-let sector.
Demand for privately rented accommodation continues to grow, but recent figures reveal an alarming decline in the number of available properties to rent, as more existing renters look to renew their existing tenancies rather than move home, adding to the widening supply-demand imbalance in the PRS.
According to Propertymark’s latest research, 73% of agents say they have seen an increase in the number of tenants renewing their tenancies over the past 12 months. With the recent lack of stock, it suggests many tenants are preferring to stay put rather than move.
An average of 127 new applicants were registered per member branch in July. This number has been on a slow upward trend since February.
Agents signed up to Propertymark membership reported having 11 properties on average per member branch that were available to rent in July – the same figure as last month.
Some 82% of member agents reported month-on-month rent prices increasing in July – a new record. Pressure on rents has been steadfast since spring last year.
Nathan Emerson, CEO of Propertymark, said: “The private rental market continues to be battered by the perfect storm of high demand, low availability and affordability issues that shows no sign of easing.
“Governments across the UK are all engaged in a tenant-focussed reform of their private rental sectors. To boost supply, they also need to consider the heavy tax burden on property owners, the impact of more profitable and less regulated short-term lets, many of which stand empty for part of the year, and the lack of new homes being built to cope with the varied needs of a growing population.”
Renters face greater competition amid shortage of rental listings
Even if the tax regime was to change, how many landlords would trust that government would not screw them in other ways or just revert back in a couple of years?
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Our housing market is broken, and the only action the government and devolved parliaments are focused on are tenant-oriented, despite the raft of legislation which has been in place for years. They need to be seen to be on the side of renters because that’s where the votes are, and hence will ‘recycle’ rules and regulations to stay visible. They need to maintain the dichotomy between hard-pressed and exploited renters, and wealthy and greedy landlords, which means there cannot be any relaxation of the increasing financial burden on landlords.
This will only accelerate the exit of thousands of landlords, just when the demand has never been higher.
A record 1300 illegal migrants crossed the Channel yesterday. Where will they live, because they aren’t being removed?
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Changing tax rules may help the supply situation but in my opinion laying off the Landlord bashing would give a far greater boost. Many Landlords of older properties are potentially going to be saddled with spending typically £8,000 to upgrade EPC ratings if current recommendations become law. The renters reform bill if it becomes law will mean that a landlord will have to pay to be part of licensing and ombudsman schemes and for decent homes inspections. With the banning of section 21 and AST’s landlords could well lose control over their own property. Tenants could walk out on a whim while Landlords will have to go to court to evict. They could be stuck with eviction proof tenants with selling up being about the only grounds that would allow them to evict and even then, this is not at the moment proposed to be a mandatory ground. So if a landlord wants to sell up or move themselves or a relative in there will be a court case. The landlord will have to make a case for their proposed actions and presumably it could be thrown out so the tenant will stay, or possibly the court may order that the landlord compensate the tenant for moving expenses and inconvenience. All this in addition to the lurking possibilities of rent controls and bans on evictions for rent arrears to assist with the cost of living crisis with, of course, no landlord compensation, exactly as happened during the pandemic. No wonder many landlords are selling up while they still can. Any intending investor in the PRS would be very foolish not think very carefully about joining the sector especially if they are borrowing money to do so and could not meet the cost of borrowing in the case of rent arrears.
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This is precisely how I think right now. A single feckless tenant cost me £20,000 because he stopped paying at the start of lockdown and I couldn’t evict him for 16 months. I have now sold that flat and will sell my remaining flat. Who, in their right mind, would want to spend their days worrying about what’s coming next to destroy their business, their health, and possibly push them into bankruptcy?
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Pretty much what the vast majority of landlords think.
You not only have to factor in the monetary cost, but the time taken and mental aggravation these sort of issues cause. It’s simply becoming “not worth it” anymore.
I’m all about being fair… but current lettings legislation is far from FAIR currently.
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