Abolishing stamp duty levy could tackle housing supply crisis
A chronic shortage of homes to let is leaving renters high and dry – with the NRLA co-ordinating a joint letter to chancellor Rachel Reeves calling for pro-growth taxation measure to encourage investment.
We have joined forces with industry groups Propertymark, the Large Agents Representation Group (LARG) and Goodlord, in outlining a series of positive changes to encourage landlords to remain in the sector and continue to invest.
Ahead of the Budget, on October 30 the NRLA and others in the sector are urging the Government to reconsider the way the private rented sector is taxed and are calling for the abolition of the 3% stamp duty levy on rental homes if landlords are:
- bringing one of England’s 250,000 long term empty homes back into use
- investing in projects that increase the net supply of housing.
With 115,000 households living in temporary accommodation, it makes no sense to have so many homes sitting empty long term and offering incentives could encourage investors to buy up those that need significant work to bring them up to standard.
It would also encourage landlords to commit to buying ‘off plan’ or look at options such converting empty commercial buildings into rental homes.
The letter, which has also been sent to Housing Secretary Angela Rayner and Housing Minister Matthew Pennycook, also calls on the Government to peg Local Housing Allowance to at least the 30th percentile throughout this Parliament.
This would provide much needed certainty for both tenants and landlords regarding housing support.
What is the size of the problem?
According to Zoopla, there are now an average of 21 tenants competing for every private rental property, with Rightmove estimating an additional 120,000 rental properties are needed to prevent rents growing exponentially.
Paul Johnson, Director of the respected Institute for Fiscal Studies has gone on record saying earlier this year that ‘the more harshly that landlords are taxed, the higher rents will be’ and pointing out that ‘one of the reasons that private rents have risen so much is that government policy has substantially increased tax payable by private landlords’.
The Government is looking to the build to rent sector to make up the shortfall of homes – and we stress that while it will be able to deliver some extra homes it cannot address all the challenges facing the private rented sector (PRS), not least as it is failing to keep pace with the number of landlords leaving the market already.
Around 1,800 units are completed each month in the build to rent market, but Zoopla sales data suggests that over 5,000 homes for sale each month are former rentals.
There are also the prices, with build-to-rent developments typically charging higher rents.
Data from Hamptons shows that average monthly rents for build-to-rent units are £1,840, 10% more than similarly high-end properties and over £500 more than the Office for National Statistics’ average rent for the private sector as a whole.
Against a background of dramatic legislative change in the shape of the Renters’ Rights Bill and new energy efficiency targets, along with economic uncertainty, such changes would be a step in the right direction when it comes to building confidence in the sector and ensuring those that need homes have somewhere to live.
The letter went on to request a more formal meeting to discuss the proposals in more detail.
More information
To read more about our calls on Local Housing Allowance click here.
