The government is under pressure to look again at the private rented sector as rocketing demand is now coupled with a shrinking availability of rental homes.
The shifting balance between homeownership and renting continues unabated, with the proportion of renters in the UK doubling over the past 20 years. While the government has taken a number of steps to try to tip the balance back in favour of homebuying, with measures aimed at deterring private landlords from the sector, the number of people looking to rent is still creeping up, leaving the country with a major issue.
This is backed up by new findings from the Royal Institute for Chartered Surveyors (Rics), which is warning the government that as smaller landlords are pushed out of the market due to the removal of mortgage interest tax relief, combined with stricter lending criteria and a higher stamp duty burden, the increasing demand for rental property could see rents pushed up by 15% over the next five years.
The real impact of losing landlords
While property let supply levels have been dropping for the past two years, according to Rics, most of the body’s members have seen a rise in the number of people looking to rent – Generation Rent – and the government is being urged to act to reform the industry.
Abdul Choudhury, Rics policy manager, said: “Withdrawing tax breaks that small landlords relied on, placing an extra 3% on second home stamp duty, and failing to stimulate the corporate build-to-rent market, has understandably [had an impact on] supply.
“[The] government must urgently look again at the private rented sector as a whole, including ways to encourage good landlords.”
“Ultimately, [the] government must consider the impact of its policies, and if the wish is to move away from the private rented sector, it must provide a suitable alternative.”
Facing reality on changing tenures
The rumours that surfaced last week about the government considering a further hike of stamp duty for landlords as a way of curbing the country’s house prices would undoubtedly be a further devastating blow to the rental industry.
There are a multitude of reasons why people are renting homes more than ever before, from being unable to raise the funds to get onto the property ladder, to simply opting for renting as a lifestyle choice as young professionals choose city centre living, often with friends, until much later in life. Meanwhile, growing numbers of families and even older generations are attracted by the flexibility of renting, as well as the lower maintenance and commitment involved compared to owning your own home.
Whatever people’s reasons for renting, it is undeniable that the sector isn’t going anywhere and the country’s rising numbers of tenants are going to need somewhere to live, despite the government’s measures to make it harder for investors and landlords to operate. Perhaps the latest statistics will encourage another look at the private rented sector to best cater for the needs of the next generation of renters.