- UK households renting doubled from 2.3m in 2001 to 5.4m in 2014
- A balance of 58% of estate agents saw a drop in buy-to-let sales since May
- 86% of landlords have no plans to increase their rental portfolio this year
An extra 2million households will be looking to rent rather than buy a home over the next decade as prices rise – and this could create a crisis as landlords are retreating after being hit with new taxes, surveyors have claimed.
As buying a home has become increasingly unaffordable over the past years, the number of UK households renting property has doubled from 2.3million in 2001 to 5.4million in 2014.
The Royal Institution of Chartered Surveyors said another 1.8million homes for rent will be needed by 2025, but warned that supply for such homes is falling and that the situation will only worsen as demand increases.
A balance of almost three in five estate agents have reported a drop in buy-to-let sales since May, according to the research.
RICS also found that 86 per cent of landlords have no plans to increase their rental portfolio this year nor over the next five years.
The association blames this on recent tax changes for the buy-to-let sector, which include an extra 3 per cent stamp duty on the purchase of homes to rent and taxing landlords’ income.
It said the shortage of rental homes will be further exasperated next year when landlords’ right to deduct their mortgage interest from their income tax bill is removed.
Jeremy Blackburn, RICS head of policy, said: ‘We are facing a critical rental shortage and need to get Britain building in a way that benefits a cross section of society, not just the fortunate few.’
He added: ‘Any restrictions on supply will push up rents, marginalising those members of society who are already struggling.’
RICS is calling on the Government to address the current shortage by reversing the rise in stamp duty and to pioneer a new build-to-rent sector in the long-term, where the private sector is encouraged to build properties specifically for residential letting.
Helen Gordon, chief executive of residential property owner Grainger, said build-to-rent would increase housing supply at a quicker pace than traditional house-building and offer tenants more stability.
Grainger said they planned to invest over £1billion by 2020 in ‘high quality, long term rental housing’.
‘In order to support us in this ambition and many others with similar plans, the Government should recognise the important role we have to play and explicitly support build-to-rent in its policies.’
The RICS findings echo those of a separate survey by the Residential Landlords Association, which said that two thirds of landlords plan to increase rents to cope with recent tax increases.
The survey of almost 3,000 private sector landlords carried also found that the same proportion do not plan on purchasing any additional properties for their portfolio.
More than half surveyed landlords said they planned to increase rents in the next 12 months to offset the impact of changes to mortgage interest relief.
And almost two in five said they would cut back on improvements to their rental properties because of the new taxes.
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