With a noticeable shortage of rental homes, Propertymark is urging the incoming government to reassess the taxation of landlords to stimulate fresh investment in the buy-to-let market.
The demand for private rental accommodations is on the rise. However, recent data from Rightmove indicates a troubling decline in available rental properties. This is partly due to tenants opting to renew existing leases rather than moving, exacerbating the already critical supply-demand imbalance in the private rented sector (PRS).
“Propertymark has consistently maintained that the PRS requires more housing to stabilize rental prices,” said Nathan Emerson, CEO of Propertymark. “However, there are numerous other factors that could make the market more appealing for both investors and tenants.”
Changes in tax relief for buy-to-let landlords over recent years have discouraged many from investing in the PRS, leading to a significant drop in net rental returns. The ultimate sufferers have been the private tenants.
With many landlords seeing their profits eroded, those remaining in the PRS have been forced to compensate for their losses by raising rents, effectively passing on the costs to tenants.
“As we approach a general election, Propertymark hopes the next government will reform the tax system to attract more investors to the PRS, ultimately reducing rents for tenants in the long run,” Emerson continued.
“While we advocate for an increased housing supply, this must be achieved through a sensible and feasible plan that considers green belt protection. Additionally, rent controls should be avoided, as they have had a detrimental impact on Scotland’s private rental sector,” he added.
As the call for a re-evaluation of landlord taxation intensifies, the PRS stands at a critical juncture, with policy decisions set to shape its future trajectory.