Rental reform undermined by lack of choice for tenants
A lack of choice for private renters about where they can live will undermine plans set out by many of the UK’s major political parties to reform the rental market.
That’s the warning from the National Residential Landlords Association (NRLA) as the Conservatives, Labour, Liberal Democrats and Green Party all propose ending section 21 ‘no explanation’ repossessions.
None of the parties properly address the most pressing and basic problem for tenants - namely the chronic shortage of homes for private rent. According to recent research on average 15 renters are chasing each available property, which has caused rents to rise across the market.
The Royal Institution of Chartered Surveyors has spoken of a “huge mismatch” between supply and demand in the sector, with renters facing “ever-rising living costs and plummeting affordability levels.”
Without bold measures by the next Government the situation is set to worsen for tenants. The NRLA’s concerns come as Savills warns that up to one million new homes for private rent will be needed across England and Wales by 2031 to meet demand.
Uncertainty over regulation of the sector, coupled with the ongoing problem of growing costs, are the key drivers of the supply crisis. This includes tax hikes since 2015 which the Institute for Fiscal Studies notes have stunted growth in the market and led to higher rents.
The NRLA is calling for certainty over the regulation of the rental market. When section 21 repossessions end, it needs to be replaced with a system which makes good on the Shadow Housing Minister’s belief that: “Landlords need robust grounds for possessions in legitimate circumstances, and they need the system to operate quickly when they do.”
Separately, research by Capital Economics suggests that scrapping the three per cent stamp duty levy on the purchase of additional homes would see almost 900,000 new long-term homes to rent made available over the next decade. This would lead to a £10 billion boost to Treasury revenue due to increased income and corporation tax receipts.
The NRLA is calling for the stamp duty levy to be scrapped where landlords bring one of the more than a quarter of a million long term empty homes back into use.
Ben Beadle, Chief Executive of the National Residential Landlords Association, said:
“Renters are being let down by a repeated failure to address the rental housing supply crisis.
“The lack of choice serves only to drive up rents and, given the shortage of alternative accommodation for them to move to, makes it harder for renters to hold rogue and criminal landlords to account.
“We will work with the next government to ensure the replacement for section 21 works for the sector as a whole. However, greater security for renters will mean nothing if they cannot find homes to rent in the first place.”
-ENDS-
Notes
• The Royal Institution of Chartered Surveyors (RICS) has warned that: “there remains a huge mismatch in the private rented sector (PRS), with demand continuing to significantly outstrip supply, leaving renters tackling ever-rising living costs and plummeting affordability levels.”
View source here.
• Zoopla noted that: “Rental demand is down 25% over the last year but competition remains high, with 15 households chasing every rental home. This is more than double the pre-pandemic average of just six which was seen between 2017-2020.” It continues: “we do not believe that the imbalance between rental supply and demand will improve materially over the next 12 months.”
View source here.
• The data from Savills can be accessed here.
• Paul Johnson, Director of the Institute for Fiscal Studies, has noted that: “landlords generally are not top of the list when looking for popular tax cuts, but, again, we need to look harder at the actual impact of these taxes. They limit the number of properties available for rent. They therefore raise the prices faced by renters.” He went on to say: “The more harshly that landlords are taxed, the higher rents will be. One of the reasons that private rents have risen so much is that government policy has substantially increased tax payable by private landlords. Even more than the price of owner-occupation, high rents in and around London and other thriving cities prevent young people moving from elsewhere to take up well-paid, highly productive jobs.”
View source here.
• Speaking at Report Stage of the Renters (Reform) Bill in the House of Commons on 24th April, the Shadow Housing Minister, Matthew Pennycook, said: “Landlords need robust grounds for possessions in legitimate circumstances, and they need the system to operate quickly when they do.”
The transcript can be accessed here.
• An independent analysis for the NRLA by Capital Economics has found that scrapping the stamp duty levy on the purchase of homes to rent would see almost 900,000 new private rented homes made available across the UK over the next 10 years. It said that that this would boost Treasury revenue by £10 billion as a result of increased income and corporation tax receipts.
View source here.
• According to Government data there were 261,474 long-term vacant dwellings in England on 2nd October 2023, an increase of 13,325 or 5.4% from 248,149 on 3rd October 2022.
View source here.
• Further information about the NRLA can be found at www.nrla.org.uk. It posts on X @NRLAssociation.
• The NRLA’s press office can be contacted by emailing [email protected] or by calling 0300 131 6363.