Addressing the Under Supply of UK Rental Housing

Addressing the Under Supply of UK Rental Housing

15:46 PM, 24th May 2022, About 2 years ago 11

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There is absolutely no doubt in my mind that additional regulation and taxes are having the opposite effect of what the Government is trying to achieve. Red tape, bureaucracy and tax are all proven methods to reduce investment.

If the real objective of the Government is for every person to be able to live in a safe home there is a very simple solution – INCREASE SUPPLY!

Imagine a scenario where every renter had a wide variety of options that fit their budget. Naturally, they would choose the best available property, which in turn would mean that the grottiest properties remain empty. The owners of those properties would then be left with three options: –

  1. Do nothing and leave the property to deteriorate and depreciate even further, or
  2. Improve the property so that people choose to live in it, or
  3. Sell the property

For those of us who book hotels (or own them), we have exactly the same options as described above. Likewise, if hotels fall into disrepair, the chances of us booking into them and not checking out sooner than expected are enhanced. This is no different to rental homes. If a property falls into disrepair, people will move out to a better property, but they can only do this if supply is greater than demand.

To incentivise investment into UK rental property, in order to increase supply, Government needs to level the playing field. Examples are as follows: –

  1. Make CGT the same for owner-occupied and rental property
  2. Provide roll-over reliefs for CGT
  3. Make Stamp Duty the same regardless of whether a person is buying one or multiple properties
  4. Allow landlords to offset finance costs against income in the same way as all other business owners do
  5. Give landlords and tenants equal rights to end a tenancy
  6. Apply Health and Safety standards equally to all homeowners, especially those with children. Alternatively, make the occupiers of property responsible for the same health and safety regulations, e.g. Gas Safety, Fire Safety, Electrical Safety etc. Why should a child living with parents in a rented property be safer than if they are living in a property owned by their parents?

Sadly, there are people who pay and are paid to portray private housing providers in the UK rental sector as parasitic capitalists of the worst kind. The reality is that landlords are simply people who have done well enough for themselves to buy more properties. If there were a lot more of us, then supply would outstrip demand, rents would not keep increasing and only those of us offering the nicest properties to live in would receive rental income and make profits.

What’s actually happening though is that landlords are being discouraged, there are not as many entering the market and there are many more selling up. This is reducing supply, leaving those who want or need to rent with a reducing pool of rental properties to choose from. This is a slippery slope, because the Government’s response is to increase regulation further. If it continues, the only rental properties still available will be owned by a small criminal element who will always continue to break the law. Is that really what the Government wants?

Please share this article and also share your own thoughts in the comments section below.

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Reluctant Landlord

17:10 PM, 24th May 2022, About 2 years ago

all this makes total sense.

Only problem is, the people who make the rules don't actually care.

We are stuck in a 'pass the buck and screw everyone else, but be seen to be helping at the same time' culture.

A bad workman always blames his tools...


9:10 AM, 25th May 2022, About 2 years ago

I think you've made a mistake about the intentions of Govt. The objective is not to do with the supply of safe homes, its to do with nudging more landlords toward selling up to increase the number of owner occupiers, which the Govt equates with Tory voters.

Ross Tulloch

10:45 AM, 25th May 2022, About 2 years ago

Sadly one of the problems is to do with minimum room sizes in HMOs. We are selling 5 properties because of the council applied minimum room size if no lounge (10m in 2 councils), evicting 20 tenants. Yet this rule means there would be at least one empty room in each property, reducing supply to those who can least afford it. We cannot have this so are selling. An attack on landlords is an attack on tenants.

jay shah

11:12 AM, 25th May 2022, About 2 years ago

Dear DSR
Wel said .

Brilliant summary.
It politicians interest to be seen to be doing good but are in fact
1) pass the bucket
2) screw everyone -
3) seen to be doing good
But please all landlords keep fighting for what you worked for .
Keep fighting for s21 or similar atleast.
Landlords paid thousands to get on ladder and now having to sell and pay all back in CGT or IHT
All plans of retirement gone

Kim Karpeta

12:06 PM, 25th May 2022, About 2 years ago

Very well summarised. I wrote to my local MP (Mr Raab) in 2016 explaining exactly this. I still have the response from the Treasury at the time. This is an extract; "Given that only a small proportion of the housing market is affected by this change, the government does not expect these changes to have a large impact on either house prices or rent levels" Try telling the tenants who are suffering the increase in rents because of the lack of supply. Clearly the government learnt nothing from Mrs Thatcher 30 odd years ago who was responsible for creating a rental market at that time.

Mark Crampton Smith

17:22 PM, 25th May 2022, About 2 years ago

Reply to the comment left by David at 25/05/2022 - 09:10
David is correct….. the government wants home owners and a PRS that is institutionally owned…. Look at the relaxation of listing conditions for REITs following FA 2022 the massive growth of build to rent…. If I was being cynical I would argue that it is all political parties that want home ownership for the electorate. And as Maggie won over swathes of traditional Labour voters by offering them ownership of their Council House…. It has been proven to be a vote winner…. Just like Landlord bashing!!


21:31 PM, 25th May 2022, About 2 years ago

I love the balance and reciprocity in your points.

A good point you made that I had not considered was about non landlord standards.
If a standard of housing must be met, it must be met for all home owners. Otherwise its not a standard, or not worth the money to implement.

A homeowner can keep their house in the worst possible overcrowded state and not have a problem.
But if a landlord breaches a standard the tenant is more than happy to accept the government pokes its nose in and says its not ok.

It shows up clearly the government is playing favourites, and we are not the favourite ones.

Old Mrs Landlord

8:04 AM, 26th May 2022, About 2 years ago

Reply to the comment left by Mark Crampton Smith at 25/05/2022 - 17:22I couldn't agree more with your first sentence. The government are clearly on a path to eliminate the individual private landlord and stimulate corporate investment in identikit housing for the sections of the population who want or are obliged to rent. This stems from their conviction that home owners vote Conservative. However, I am not so sure about all political parties wanting universal home ownership. Clearly there are sections of the community (students and youngsters just leaving the parental home, for instance) for whom home ownership is impracticable, unsuitable or unattainable There are some who do not want the responsibility of maintenance of a building and others who cannot face the prospect of mortgage debt. Indeed, it is arguable that the trend amongst today's young people is to hire everything they need or have it delivered to them on demand so they can live a life of instant gratification and freedom from responsibility.
As for imposing on home owners all the restrictions and requirements demanded of landlords who provide living accommodation for others, surely it is those very freedoms to live as they please in their own homes that make the idea of home ownership so attractive to tenants. (Read the letters from Mick Roberts's tenants if you doubt this.) Life is a succession of risks and childhood is the time to gradually learn to live with and deal with those risks. We cannot cocoon the entire population from the cradle to the grave and it would be foolish and counter-productive to try.

Dr Monty Drawbridge

16:35 PM, 26th May 2022, About 2 years ago

Nicely put.

The "German system" used to be often quoted as an ideal solution largely because it was difficult to move a tenant out of a property. We seem to be moving towards that part of the "German System" now.

But what is missing are all the incentives for landlords which come along with that German system. Annual depreciation allowance of the building (2% of build cost or value, I think). Inheritance tax tapering to zero after however many years. All costs including all finance fully tax deductible. etc etc.. I may be a little out of date now but you get the general point.

Mark Crampton Smith

17:45 PM, 26th May 2022, About 2 years ago

Reply to the comment left by Dr Monty Drawbridge at 26/05/2022 - 16:35
Indeed Dr Monty...... The German system has evolved since the war, and even there they are trying to reduce the number of Private Landlords in the market; more Germans are now living in owner occupation than 10 years ago and the majority of rented accommodation is owned by pension funds and other financial institutions.
Here, we are of course going to throw the baby out with the bathwater; all of my nearly 500 landlord clients are highly responsible; respond quickly to changes in the need for accommodation locally, and entirely mindful that for the occupant the property is a home. I would argue that small scale landlords buying wisely and in clear areas of need, is a much more efficient mechanism that large scale build to rent homogenous "lifestyle" developments, for delivering an effective PRS. Managing the "rouge landlords" as they have come to be know has been a political issue since Peter Rachman in the '50s and '60s, and despite the fact that even Shelter acknowledge they are a minority the expedient political solution has led to the indiscriminate persecution of the private landlord.

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