The Residential Landlords Association (RLA) has warned of a housing supply crisis in the private rented sector (PRS), claiming that more landlords are intending to sell, despite rising demand from tenants, according to a new survey by PEARL, the RLA’s research-based policy unit.
The RLA also recommended that the government should scrap the Stamp Duty Land Tax (SDLT) levy placed on landlords who own additional properties, believing that such a measure would help boost the supply of homes in the PRS.
Since April 2016, landlords who owned more than one property started paying an additional three per cent on SDLT, in a move that the government insisted was necessary to help reduce competition between first-time buyers and buy-to-let landlords.
Calls for the scrappage of the Stamp Duty levy come, as recent figures from the Office for National Statistics (ONS) showed that receipts for SDLT were three per cent lower for the current financial year, than for the previous year.
Steady demand observed
The RLA’s survey found that 41 per cent of landlords observed no major change in demand for properties in the PRS, while 25 per cent noticed an increase in demand. An additional 15 per cent believed demand was actually declining.
Despite this perception of steady demand as seen by landlords, supply within the PRS continued to fall, and 31 per cent of respondents planned to sell at least one property in the next 12 months, according to the RLA.
This was compared to just 13 per cent of landlords saying they were thinking of making a purchase in the next year, indicating a desire to remove additional properties from portfolios in the coming months.
A decline in the supply of housing in the PRS was expected to put upward pressure on rents, and a survey from the Royal Institute of Chartered Surveyors (RICS) confirmed this trend. Covering activity in September 2019, RICS found that most people surveyed expected rents to grow by 2 per cent in the next year.
RLA urges pro-growth policies
Using its findings, the RLA urged the government to consider adopting a more pro-growth policy approach, by asking for it to consider scrapping the SDLT levy.
The levy was originally implemented by former Chancellor George Osborne, during David Cameron’s premiership, and subsequent governments have decided to let it remain in place.
David Smith, policy director at the RLA, explained: “Those who argue that a smaller PRS is good for tenants wanting to buy a home are plain wrong. The government’s policies are choking off the supply of homes to rent, whilst demand remains strong.”
Mr Smith added: “This is only making life more difficult and potentially more expensive for those looking for somewhere to live. Without an urgent change of course, and the introduction of pro-growth policies, the situation will only become worse.”