The government has been called upon to deliver 1.8 million rental homes, as new figures show a sharp drop in the number of rental properties available - pointing to an ailing rental market that cannot keep up with demand.
The call comes from the Royal Institution of Chartered Surveyors (RICS), which has highlighted that the number of UK households renting property doubled from 2.3 million in 2001 to 5.4 million in 2014.
The institution says that rising house prices are making home ownership increasingly unaffordable and claims that at least 1.8 million more households will be looking to rent rather than buy a home by 2025.
Since the government’s introduction of the 3% Stamp Duty Land Tax (SDLT) surcharge earlier this year, sales of buy to let properties have dropped considerably and the RICS has found that 86% of landlords say they have no plans to increase rental portfolio this year – with the trend set to remain for the next five years.
The problem is expected to worsen next year when landlords’ right to deduct their mortgage interest from their income tax bill is removed.
The RICS has suggested that the SDLT increase should be reversed and has called on the government to put other measures in place to encourage building and investment in the sector, specifically:
• Encourage private house builders to build specifically for the rental sector
• Give pension funds tax breaks to fund large scale rental properties
• Encourage councils to release brownfield sites for building homes for tenants
Jeremy Blackburn, Head of UK Policy, RICS, commented:
“Our latest figures show that there has been a 15% decline in house sales to first times buyers over recent months. That tells us that for all the rhetoric, David Cameron and George Osborne’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.”
The RICS’s call for the government to support the Private Rented Sector follows Communities Secretary Sajid Javid’s announcement of a new scheme to encourage developers to build more homes for people to buy.
Speaking at the Conservative Party Conference in Birmingham, Javid said that the UK’s housing shortage was a “huge issue” and that it would be his “number-one priority”.
Among the plans announced at the conference were the “Accelerated Construction” scheme, which will use £2bn of public sector borrowing to get houses built on publicly-owned “brownfield” land, and a £3bn Home Building Fund, which will provide loans to stimulate housing projects.
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4th October 2016