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0:03 AM, 10th August 2023, About 9 months ago 36
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The lack of housing supply is creating huge problems in the private rented sector, an industry body has warned.
The Association of Independent Inventory Clerks (ACII) blames the Renters Reform Bill and energy efficiency proposals for creating “the perfect storm in the rental market.”
With more and more landlords leaving the private rented sector, many renters will be left in limbo trying to find a place to rent.
Daniel Evans, chair of the Association of Independent Inventory Clerks, says: “Nobody knows how many landlords have left or are about to leave.
“One large firm of accountants, analysing HMRC data reckoned 70,000 landlords exited the private rented sector (PRS) in 2022 and it looks as though the situation is getting worse.
“Every single company that supplies the sector is going to struggle because too many landlords are leaving or have already left, and nobody knows where the new landlords are going to come from.”
Mr Evans believes that one of the biggest barriers to landlord recruitment is the changes in tax regulation.
Since April 2020, all buy-to-let landlords have had to pay tax on all their rental income although they do receive a tax credit worth 20% of their mortgage interest payments.
He says that the government should rethink their tax policy on landlords.
“The first thing the government should do is U-turn on that tax policy. Landlords should be able to offset all their mortgage costs against tax.
“The new rules mean that landlords who pay higher rate tax have had to pay substantially more and some who were in the lower band have been pushed into paying the higher rate.
“Profits have been squeezed for many landlords and high tax rates aren’t going to attract new ones.”
Mr Evans says the other problem is that the energy efficiency requirements have not yet been published.
Though the plans have not been made into law, ministers have previously proposed that by April 2025, newly rented properties in England and Wales will need to meet a minimum EPC standard of C – tougher than the current E standard.
The regulation is also slated to apply to existing tenancies from 2028.
He says many landlords will have already left the PRS due to the proposed changes.
Mr Evans says: “The problem here is that a lot of landlords who were worried by this rule change may have already sold up and left or are in the process of doing so,”
“Any slight relaxation of the rules now isn’t going to tempt new landlords in. We have to face facts a lot of our housing stock is old and needs improvement to save energy.
He says the government should be offering financial incentives to landlords to help improve older housing stock which may need energy-efficiency improvements.
“There should be some financial support to achieve these targets. If that was in place, the sector might look more attractive.
Mr Evans says the government needs to build more energy efficient homes to entice new landlords into the sector.
“The bottom line is that we’re not building enough houses. If more rentable homes were built and they already had the energy efficiency standard, then more landlords might consider buying them if they could see a decent return on their investment.
He added: “Landlords have been made to feel like they’re public enemy number one and, for the vast majority of them, that’s totally unfair.
“The PRS is a vital part of the country’s overall housing strategy, if we’re not careful, it’s going to be damaged beyond repair.”
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GlanACC
16:28 PM, 10th August 2023, About 9 months ago
Reply to the comment left by Martin O'Hearne at 10/08/2023 - 15:51
Correct, Brexit has very little to do with the state of the PRS. Maybe only issue is we can't return illegals to where thay came from so increases the shortgage of rental properties, this also reduces the availability of temporary accomodation available. Big problem was with the Local Housing Allowance being so low and the total logjam in the courts systemmeant you couldn't get rid of the rubbish easily.
Steve A
16:35 PM, 10th August 2023, About 9 months ago
If the PRS is damaged beyond repair then surely that's exactly what this government set out to achieve? Punative taxation, overoad of regulation, selectuve licensing to give local councils a new revenue stream, relentles publicity how they are helping tenants and renters to fight exploitation by greedy landlords!
GlanACC
16:55 PM, 10th August 2023, About 9 months ago
Reply to the comment left by Stephen Allison at 10/08/2023 - 16:35
I don't think the government set out to achieve this at all. However due to incompetence (ala Kwartung, Truss and Osbourne) and lobbying by GenRent and Shelter (who are very organised) it got pushed through. Couple this with low LHA rates what do we expect, you reap what you sow.
Christopher Lee
18:30 PM, 10th August 2023, About 9 months ago
Reply to the comment left by Tom McGrath at 10/08/2023 - 13:29You deserve an award for the most tenuous link to Brexit ever.
Andrew57
18:48 PM, 10th August 2023, About 9 months ago
Boo boo. Typical lack of thought and planning on the part of the UK government. Everyone blames Brexit for the state of the UK economy when in actual fact it is the fault of a government who couldn't organise the brewery event!
Tom McGrath
19:02 PM, 10th August 2023, About 9 months ago
Reply to the comment left by Christopher Lee at 10/08/2023 - 18:30
How does a government raise revenue? By taxing the income of its people, and trade and industry. Trade with the EU dropped by 40% after Brexit. Skilled labour, Polish plumbers and Czech carpenters etc, disappeared back home in their hundreds of thousands, so the number of tax-paying earners declined.They didn't like the 'hostile environment. " (As landlords will tell you, it's unpleasant to be publicly vilified.) Building costs have rocketed.
With the decline of manufacturing and trade in this country, where could the government look to raise revenue? Answer, the PRS, and the smaller landlords therein.
The small landlords are leaving in their droves. Will the last one to leave, please switch off the light?
Christopher Lee
19:08 PM, 10th August 2023, About 9 months ago
Reply to the comment left by Tom McGrath at 10/08/2023 - 19:02
Uk GDP growth since the referendum is identical to Germany's.
How did you manage to disentangle the impact of Brexit from Covid and the Russia/Ukraine war? I'd love to see your analysis.
Bristol Landlord
19:38 PM, 10th August 2023, About 9 months ago
Reply to the comment left by Stephen Allison at 10/08/2023 - 16:35Government interference in the PRS is completely deliberate. The only question being exactly why?
Excellent article on how the Govt is skewing the sector in favour of incorporated landlords.
https://www.landlordtoday.co.uk/breaking-news/2023/3/the-war-on-landlords--a-reader-writes
Two theories for the destruction of the PRS:
1. National scapegoating.
2. The moneyed classes hatred of social mobility.
My theory for the Government’s deliberate destruction of independent landlords is for reasons of greed and corruption by Government ministers. They want to corporatise the PRS for personal gain.
The government minister who announced in April 2015 the demise of mortgage interest being tax deductible for private landlords, but not corporations, was George Osborne.
After George Osborne left Government employment one of his later roles was in an “advisory” role at BlackRock.
“He continued to advise the asset manager BlackRock”
How much was he paid for his “advice”?
https://en.m.wikipedia.org/wiki/George_Osborne
BlackRock are heavily invested in rental properties in the UK and globally including Real Estate Investment Trusts (REIT)
https://www.blackrock.com/uk/individual/products/272400/
Connect the dots!!!
Bob Redley
19:51 PM, 10th August 2023, About 9 months ago
One down, 8 to go. Tenants are devastated as some have been in for nearly 20 years but politicians and councils seem determined to tax and regulate us out of business
Tom McGrath
20:08 PM, 10th August 2023, About 9 months ago
Reply to the comment left by Christopher Lee at 10/08/2023 - 19:08
As can be seen from the accompanying analysis, the effects of Brexit started long before the Covid crisis or the Ukraine war./Users/minitom/Desktop/migrationobservatory.ox.ac.uk:.webloc
Some people seem to believe that the UK is an immutable, hierarchical society, but it is changing all the time, and the change is brought about by the people who come into the country and those who leave. Because of Brexit, the number of people from the EU has declined, and the (record) numbers of people now arriving are largely from non-EU countries.