More landlords are selling property than buying as demand for rental homes continues to increase, stoking fears of an imminent supply crisis, according to the latest data from the Residential Landlords Association (RLA).
The research, based on a survey of more than 2,700 landlords, found that almost 25% had witnessed an increase in demand for private rented property over the last three months, while 41% had seen no change and 15% believed demand had fallen.
The increase in demand coincides with a continuing fall in the supply of rented property. The research confirms fears of a contraction in the private rental sector (PRS) with the news that, over the next 12 months, 31% of landlords will consider selling a minimum of one property, whereas only 13% say they plan to buy one.
Nonetheless, the figures are validated by recent statistics produced by other organisations. The shortage of rented housing along with record demand from tenants has fuelled a steep hike in rents across the UK, according to estate agency Rightmove.
The Royal Institution of Chartered Surveyors (RICS) also warns of further increases in rents over the next five years as the result of the demand for rented housing outstripping supply.
Stamp duty land tax to blame
The cause of the mismatch between supply and demand is said to be due to political decisions. Some years ago, the government adopted a policy designed to reduce investment in private rented housing by means of tax increases in order to skew the market in favour of owner-occupiers. However, the latest figures show this strategy to have been ill-conceived.
Since April 2016, landlords who own more than one rental property have had to pay an additional 3% on stamp duty land tax (SDLT) , a change that the government insisted was vital in helping to reduce competition between first-time buyers and and buy-to-let landlords.
Although the levy was introduced by former chancellor George Osborne, successive governments have failed to abolish it.
The RLA is appealing to the government to promote measures in favour of growth, including scrapping the SDLT on the purchase of additional properties in areas where landlords supplement the net total of available rental homes. The association is also calling for long-term empty homes to be brought back into use.
Calls for the scrapping of the stamp duty levy come amid recent figures from the Office for National Statistics (ONS) showing that receipts from the tax were 3% lower for the current financial year than for the previous year.
RLA advocates policies for growth
David Smith, Policy Director of the RLA, commented: “Those who argue that restricting the private rented sector benefits tenants who want to buy a home are just mistaken. The roots of the problem lie in the unaffordability of much property and the severe restrictions currently imposed on mortgages.
“The government’s policies,” Smith continued, “are throttling the supply of homes to rent while demand remains strong. This can only make life more difficult and probably more expensive for those searching for somewhere to live.”
Smith concluded that the situation will only deteriorate unless there is an immediate change of course through the introduction of policies promoting growth.