The UK are facing a ‘critical rental shortage’ as millions of additional households will look to rent rather than buy a home in the next nine years, according to the Royal Institution of Chartered Surveyors (Rics).
At least 1.8 million more households will be looking to rent rather than by a home by 2025, however figures show that 86% of landlords have no plans to increase their rental portfolio this year.
The number of UK households renting property doubled from 2.3 million in 2001 to 5.4 million in 2014, but the Government’s measures to dampen the demand for buy-to-let investments in April mean the rental sector in unlikely to keep up with the predicted demand.
The changes to the Stamp Duty threshold meant anyone buying a home that is not their main residence must now pay a 3% stamp duty surcharge. In Scotland, the Land and Buildings Transaction Tax (LBTT) was also increased.
The problem is expected to be exasperated next year, when landlords’ right to deduct their mortgage interest from their income tax bill is removed.
Rics are calling on Prime Minister Theresa May to abandon David Cameron’s previous home ownership focus and reverse the Stamp Duty measures in order to address short term rental supply issues.
They recommend 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.
Rics also recommended a pension fund incentivised with tax breaks to build large scale rental properties with affordable elements and want local authorities holding brownfields sites to be encouraged to release land for such properties.
They are also calling upon the Housing Minister to adopt the existing voluntary Private Rented Sector (PRS) Code.
Jeremy Blackburn, RICS head of UK policy said: “It’s time for Theresa May to get out her hard hat. 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.
“Our latest figures show that there has been a 15% decline in house sales to first time buyers over recent months. That tells us that for all the rhetoric, David Cameron and George Osbourne’s Starter Homes Strategy failed to get off the ground.”
Mr Blackburn added: “The Private Rented Sector became a scapegoat under the previous Prime Minister, and because of that it suffered. Yet with increasingly unaffordable house prices, the majority of British households will be relying on the rental sector in the future.
“We must ensure that it is fit for purpose, and the Government must put in place the measures that will allow the rental sector to thrive. Any restrictions on supply will push up rents, marginalising those members of society who are already struggling.”