With rising house prices making home ownership increasingly unaffordable, it is predicted that by 2025, 1.8 million more households will be looking to rent, rather than buy.
However, new RICS figures show that 86% of landlords have no plans to increase their rental portfolio this year – with that trend set to remain for the next five years. Additionally, a net balance of 58 per cent of RICS estate agents have reported a drop in buy-to-let sales since May.
The number of UK households renting property doubled from 2.3 million in 2001 to 5.4 million in 2014. However, earlier this year, the Government took measures to dampen the demand for buy-to-let investments by making changes to the Stamp Duty threshold. This has further reduced supply, arguably making a 2025 rental supply crisis more likely.
The problem is expected to be exasperated next year when landlords’ right to deduct their mortgage interest from their income tax bill is removed.
“We urge the Prime Minister to abandon David Cameron’s previous home ownership focus and reverse April’s Stamp Duty measures in order to address short term rental supply issues,” RICS said in a statement.
However, they are recommending that government takes a much bolder long-term approach and pioneers a new build-to-rent sector, with the private sector encouraged to build properties specifically for residential letting. It would like to see pension funds incentivised with tax breaks to build large scale rental properties with affordable elements. Additionally, local authorities holding brownfields sites should be encouraged to release land for such properties.
“We call for the Housing Minister to adopt the existing voluntary Private Rented Sector (PRS) Code, which would regulate both the build-to-rent and buy-to-let sectors and protect the most vulnerable renters,” the statement said.