It appears that the government has finally woken up to the fact that there are too few rental homes to meet demand as a result of landlords quitting because of high tax and red tape.
In a letter to the Levelling Up, Housing and Communities Committee, the junior housing minister Felicity Buchan writes: “I recognise that demand is currently outstripping the supply of properties available to let.”
This comes against the backdrop of figures from Zoopla which show that so far this year, compared with the five-year average, the demand for private rented housing in the UK is up 142 per cent, whilst the supply of such homes has fallen by 46 per cent.
Responding to Buchan’s admission, the policy director of the National Residential Landlords Association - Chris Norris - says: “We welcome the minister’s recognition of the supply crisis in the private rented sector, but the government needs to rectify the mistakes it has made in causing this.
“Since 2015 successive Chancellors have sought to choke off investment in the market with a series of tax hikes. All this has achieved is to cut supply whilst demand continues to soar for fewer and fewer properties. The ultimate losers in this are tenants, who are finding it more difficult to access the homes they need.
“We cannot continue to limp along without a pro-growth strategy which embraces tax measures to support investment and ensure renters can find a place to call home.”
In July 2015 the then Chancellor, George Osborne, announced that mortgage interest relief for private landlords would be restricted to the basic rate of income tax. In November 2015, again as Chancellor, Osborne used the Autumn Statement to announce a three per cent stamp duty levy on the purchase of homes to rent out to be introduced from April 2016.
The 2016 Budget announced that the higher rate of Capital Gains Tax would be cut from 28 to 20 per cent and the basic rate from 18 to 10 per cent. However, it noted that there would be an additional eight per cent surcharge to be paid on residential property.
And then the current Chancellor, Jeremy Hunt, announced last month that the government would reduce the Capital Gains Tax Annual Exempt Amount from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024.
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