October 29, 2024 12:09 pm

Insert Lead Generation
Nikka Sulton

The National Residential Landlords Association (NRLA) has highlighted urgent concerns in the rental market that it believes the Chancellor should address in tomorrow’s budget. These issues, the NRLA argues, are critical not only to landlords but to the millions of private tenants navigating high demand, low supply, and increasing rents across the country.

One primary challenge is the limited choice for renters, who are facing intense competition for available properties. Demand for rental homes now far outweighs supply, a situation that has been escalating since the pandemic. As a result, many tenants have fewer options when it comes to choosing where they live, which, in turn, has led to higher rents. Additionally, with fewer housing choices, tenants have a tougher time holding poor or negligent landlords accountable, as they lack alternative housing options.

According to Zoopla, rental competition has surged, with an average of 21 people vying for each available property, more than double the rate seen before the pandemic. Zoopla notes that “Increasing the supply of homes for rent is essential to help to alleviate the scale of rent rises in the face of sustained demand.” Without measures to boost rental supply, they argue, tenants are likely to face further rental increases and ongoing limitations in housing choice. 

The NRLA hopes the Chancellor will consider policies that encourage growth in rental stock, supporting both tenant needs and the overall stability of the housing market.

Tina Paillet, President of the Royal Institution of Chartered Surveyors (RICS), has voiced concerns about the severe pressures facing renters across the UK. She noted that recent RICS survey results consistently highlight how demand for rental properties is far exceeding supply, creating significant challenges for tenants. This supply-demand imbalance has led to higher rents and reduced choice, making affordable housing increasingly difficult to access for many renters. Paillet called for action to address these issues, emphasising the importance of strategies that directly increase the availability of rental properties and improve overall affordability.

To address the shortage, Paillet suggested introducing pro-growth tax measures aimed at supporting landlords who invest in the rental sector. One proposed measure includes eliminating the current 3% stamp duty surcharge on homes purchased to rent if landlords refurbish these properties and bring any of England’s 250,000 long-term empty homes back onto the rental market. By targeting these unoccupied properties, this approach aims to increase housing stock without requiring new construction. 

According to Paillet, such a policy shift could help alleviate the housing crisis by encouraging landlords to create more rental options for tenants. Bringing long-term vacant properties back into circulation could not only ease supply issues but also improve affordability by reducing upward pressure on rents. This focus on revitalising underutilised housing aligns with broader efforts to make renting more accessible and affordable for a larger segment of the population, addressing one of the primary housing challenges facing the UK today.

 

Limiting Tax Hikes to Prevent Rent Increases
Additional tax hikes on the rental sector would only burden tenants. Paul Johnson, Director of the Institute for Fiscal Studies, noted that tougher taxes on landlords typically lead to higher rents. He pointed out that one reason private rents have surged is the substantial tax increases placed on landlords by government policy. Reducing tax pressures on landlords could help keep rent levels manageable for tenants.

Encouraging Energy Efficiency Investment
The Chancellor is also urged to back initiatives that encourage energy efficiency upgrades within the private rental sector. The Committee on Fuel Poverty suggests that landlords could be incentivised to meet energy standards through various supports, such as tax offsets, loans, or grants. These options could help landlords, particularly those with low-profit margins in low-rent areas, afford necessary upgrades and reduce energy costs for tenants.

Providing Clarity on Housing Benefit Rates
Both tenants and landlords need reassurance that Local Housing Allowance (LHA) rates will remain at least at the 30th percentile of market rents for the rest of the parliamentary term. This stability in housing benefits would offer support to low-income renters and help landlords manage affordable housing for a larger number of tenants.

 

The Joseph Rowntree Foundation recently calculated that if Local Housing Allowance (LHA) rates remain frozen over this parliamentary term, private renters who rely on housing benefits could end up £700 worse off each year, on average. This shortfall highlights the increased financial burden on tenants who are already struggling with affordability challenges in a market where demand far exceeds supply.

Speaking in advance of the Budget, Meera Chindooroy, Deputy Director for Campaigns, Public Affairs, and Policy at the National Residential Landlords Association, noted that a chronic shortage of rental homes across the country is putting significant pressure on tenants. According to Chindooroy, the government’s planned reforms in the Renters’ Rights Bill won’t be sufficient to achieve its objectives without broadening tenants’ housing options. She added that the government’s policies must address this supply-demand imbalance to make any meaningful difference for renters.

To tackle these issues, Chindooroy suggested that the Chancellor should introduce tax policies that promote growth in the sector and encourage investment in energy efficiency improvements. Many rental properties still lack sufficient energy-efficient infrastructure, and supporting landlords in addressing this would benefit tenants while contributing to broader sustainability goals. She pointed to measures like tax incentives for energy-efficient upgrades, which could make properties both more affordable for tenants and more environmentally friendly.

Furthermore, Chindooroy stressed the need for the government to ensure stability in housing benefit rates, urging that LHA rates be pegged to market rents for the remainder of this parliamentary term. Without such a commitment, tenants may continue to face uncertainty in housing costs, which could lead to further financial strain.

 

 

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