Government ‘risks rental crisis’ with landlord attacks

The government could trigger a rental crisis if it continues its attacks on private landlords, one tax expert warns.

Landlords are being forced to sell up due to a ‘tsunami of legislation’ that has made it increasingly difficult and costly to operate in the sector.

Heather Powell, the head of property at Blick Rothenberg, said: “The statistics show that 2.81m individuals reported income from rental properties in 2022 to 2023 to HMRC, accounting for £44.7billion of rents.

“The number of private landlords declaring rental income has also increased slightly from 2018 to 2023.”

Big drop in homes to rent

She continued: “However, the government needs to ensure that landlords do not decide to sell up or there will be a major decrease of homes available for rent.

“Unincorporated landlords have faced a tsunami of legislation in the last 10 years.

“This has included a restriction in the proportion of their mortgage interest that can be deducted when calculating their tax liability.”

Energy Performance Certification (EPC) regime

The latest legislation faced by landlords is to meet the Energy Performance Certification (EPC) regime.

The government wants rented homes to have an EPC of C by 2030 – but many landlords will struggle to meet that deadline.

She says that private landlords are considering their options, especially with forecasts of low future growth in house prices.

Also, landlords who are remortgaging at higher rates and facing EPC upgrading costs will struggle to charge enough rent to meet their higher costs.

That scenario could see ‘many’ landlords deciding to sell – especially if, as is being predicted, higher capital gains rates will be imposed from April 2025.

Unlikely to be in a position to buy

Ms Powell added: “Tenants are unlikely to be in a position to buy and the delivery of new homes for rent has slowed due to the financial constraints faced by the registered social housing providers.

“Many graduates and key workers rent, and this could leave them without any housing options, which will not help the economy.

“Changes to taxes and other legislation need to be carefully considered to ensure that homes are available where they are needed, which means private landlords need to be encouraged to remain in the sector.”

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