Spareroom urges reforms to tackle rental crisis

Spareroom urges reforms to tackle rental crisis

0:02 AM, 19th February 2024, About 3 months ago

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Spareroom is demanding the government take action against the rental crisis.

The flatshare website says residential lets have become a less appealing option for landlords due to government changes.

The website has listed changes they would like the government to implement to tackle the challenges in the private rented sector.

Raising the rent-a-room scheme threshold

Spareroom is advocating for adjustments in tax policies to promote fair treatment across the rental sector.

The flatshare website proposes:

  • Raising the Rent a Room Scheme threshold: asking the treasury to set the threshold at £9,795 in the next Budget, equivalent to the level of Rent a Room relief in 2016. At this level, 80% of room rents would be below the tax relief threshold.
  • Level the tax playing field to encourage more residential lets: asking the treasury to review the range of tax reliefs offered to the long-term rented and short-term rented sectors. By no coincidence, the number of short-term rental properties in the UK has grown by 20%, according to a 2023 VisitBritain report.

Residential lets have become a less appealing option for landlords

Matt Hutchinson, SpareRoom director, said: “Unprecedented rent hikes over the past two years have pushed thousands of homeowners into tax who would usually be eligible for Rent a Room relief, putting them off renting out a room. Almost half (49.3%) of room rents in 2023 were above the tax relief threshold of £7,500, compared to just 21% in 2016.

“Furthermore, residential lets have become a less appealing option for landlords as a result of government changes.

“Landlords of residential properties in the long-term rental market don’t benefit from several key tax reliefs offered to short-term let landlords, which has led to many landlords switching to short-term lets or quitting the market altogether, further fuelling the supply shortage.”

Landlords will leave the sector

The website says without these changes more landlords will leave the rental sector.

SpareRoom’s December 2022 survey of landlords and agents found that 41% of landlords were either looking to reduce their portfolio in 2023 or exit the rental market altogether.

Almost two-thirds of participants in a RICS monthly survey also reported seeing an increase in the number of buy-to-let landlords looking to sell their properties and exit the residential rental market.

Almost two-thirds reported a decline in interest from new UK-based buy-to-let investors over the past six months, while 30% cited a decline in interest from overseas buy-to-let investors.

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