The private rented sector is under strain due to a shortage of properties, with the government being urged to do what it can to boost the market.
The latest figures show that, as of 2020/2021, 2.74 million unincorporated landlords declared a rental income on their tax returns, according to HMRC. This was a slight decline from 2.79 million 2019/2020, but is enough to mean that tenants in some areas are still finding rental property in short supply.
For landlords, competition in the private rented sector is fierce. Those operating in high demand areas in particular are seeing strong rents and positive yields. But for tenants, the government is under pressure to reassess the market.
In a statement from Chris Norris, policy director for the NRLA, the body says the ‘crisis’ in the private rented sector has been brought about by the actions of successive recent governments, and the policy should change in order to support the much-needed housing provided by the buy-to-let sector.
Pro-growth strategy is needed
The statement was in response to a letter by the Felicity Buchan MP, the minister for the private rented sector, to the Levelling Up, Housing and Communities committee, which admitted that “demand is currently outstripping the supply of properties available to let”.
Norris’s statement read: “We welcome the Minister’s recognition of the supply crisis in the private rented sector, but the Government needs to rectify the mistakes it has made in causing this.
“Since 2015 successive Chancellors have sought to choke off investment in the market with a series of tax hikes. All this has achieved is to cut supply whilst demand continues to soar for fewer and fewer properties. The ultimate losers in this are tenants, who are finding it more difficult to access the homes they need.
“We cannot continue to limp along without a pro-growth strategy which embraces tax measures to support investment and ensure renters can find a place to call home.”
Private rented sector needs landlords
One big issue that has affected the buy-to-let sector in recent years in the increase in legislation and administration involved for landlords and property investors.
While some of the changes have been welcome in boosting the standards of the sector, others are seen as a punitive attempt by the government to dissuade property investors – which can be ultimately detrimental to the tenants who rely on the sector.
Nick Lyons, CEO at inventory specialists No Letting Go, comments: “There is a chronic shortage of houses in the UK and the private rented sector is critical.
“At the moment, there’s a huge demand for rented homes and that has pushed rents up. But the growing amount of administration around compliance and the proposed changes to allowances in capital gains tax is making some landlords wonder whether they should continue or sell up before the new arrangements come in.”
Compliance will become embedded
Lyons continues: “Compliance is a big issue now and the bureaucratic burden within the sector is becoming heavier. This is why more and more landlords are turning to letting agents to manage their portfolios and why there are more specialists, like us, providing services.
“The entire sector is becoming more professional and that’s a good thing. It may become more difficult for individual landlords to muddle along managing properties themselves – they are going to need more professional support to keep across all the changes that will inevitably come along.”
Lyons concludes: “There’s still a lot of activity in the sector. There is a vast housing need in this country and the PRS holds the key.
“When everything settles down, the regulatory changes become embedded and mortgage rates begin to ease, people will see the value of growing their portfolios once more. I believe the sector has a rosy future – it has to. The UK depends on it.”