The government should aim to boost the supply of much-needed housing stock in the private rented sector by scrapping the 3% stamp duty surcharge for buy-to-let landlords acquiring additional properties, according to the National Residential Landlords Association (NRLA).
The organisation has once again argued that abolishing the stamp duty surcharge would boost housing market activity by encouraging investors to return to the market and invest in properties and that would in turn help meet the rising demand for rental homes and drive up transaction levels.
Mortgage interest relief changes, the scrapping of the ‘wear and tear’ allowance and the introduction of the 3% stamp duty surcharge have hit landlords’ profits in recent, which partly explains why so many people have exited the BTL market and thus reduced the supply of private rented stock.
The government’s draconian tax changes have not just pushed a number of BTL landlords out of the PRS, but have also left prospective tenants in some parts of the country with little alternative but to bid against each other, pushing rents up in the process, as a result of falling housing supply.
Given that investors invest in a wide range of properties, Ben Beadle, chief executive of the NRLA, argues that supporting activity in this area of the market would add to the net supply of housing.
According to Capital Economics, removing the stamp duty surcharge would see almost 900,000 new private rented homes made available across the UK over the next ten years.
As a result of increases in income and corporation tax receipts, the modelling suggests this would lead to a £10 billion boost to Treasury revenue over the same period.
Beadle said: “Ministers have been repeatedly warned of the damage that would be caused if they continued to attack the private rented sector.
“The supply crisis is completely counterproductive to the government’s mission to turn renters into homeowners. By suppressing supply whilst demand increases, with rents going up as a result, they continue to make it harder for tenants to save for a home of their own.
“The chancellor needs to wake up to a crisis of the government’s own making, scrap the tax on new homes to rent and review other measures which add to a landlord’s costs.”