The body of chartered surveyors has warned that, if no measures are taken, the 1.8m extra households looking for rent will be left in the dark by 2025.
To help solve the issue, the institution has called on the Government to offer tax breaks to encourage building and investment in the sector.
Stamp duty change – the underlying factor
According to Rics data, the number of households renting rose from 2.3m in 2001 to 5.4m in 2014. Any further investment from landlords in property had then been hit by changes to stamp duty made earlier this year.
Anyone buying a home now has to pay an additional 3% stamp duty surcharge, which led to a spike in property purchases in March, just before the new rule come into effect.
Next year, landlords will be hit once again. This time their right to deduct their mortgage interest from their tax bill will be removed.
Landlords and first-time buyers
The suggestion Rics made, to reverse the additional stamp duty would infuriate most wannabe first-time buyers as a lot of them claim to frequently be outbid by investors.
Generation Rent, a group that fights for better conditions for tenants, told the BBC:
It does give first-time buyers a much-needed advantage against people who are simply betting that house prices will keep going up.”
“In the first three months of the surcharge, the tax on second homes raised £424m – that cash could help build new homes for people on low incomes.”
David Cox, the managing director of the Association of Residential Letting Agents (ARLA) and representing Generation Rent’s counterpart said:
Tenants will be hurt most, as landlords recover the stamp duty increase by charging tenants more,”
“The simple answer is that we need to build more homes.”
The other issues
On top of the reversal of the stamp duty increase, Rics revealed three other core aspects of Britain’s property market that need to change for a healthy future:
- Private house builders to be encouraged to build specifically for the rental sector
- Pension funds to be given tax breaks to fund large scale rental properties
- Councils to be encouraged to release brownfield sites for building homes for tenants