Tenants, including many with children, are finding it harder to access long term homes to rent as Government policy is driving landlords to move into the holiday lettings market, says the leading landlords' organisation.
The warning comes as figures published today show that Airbnb accommodation now accounts for one in every four property listings in some parts of the country. This follows a study published by ARLA Propertymark which found that nearly half a million properties could be left unavailable for longer-term rent as more landlords exit the market in favour of short-term lettings.
According to the Residential Landlords Association, which has been campaigning on the issue since 2016, one of the main reasons for this is the change in the taxation of landlords which is driving many landlords out of the long-term sector. The full impact of the restriction of mortgage interest relief to the basic rate of income tax applies from April, making many landlords significantly worse off or even unable to make a profit on their lettings. This change does not apply to landlords with short-term lets so encouraging long-term landlords to move into that market.
There is mounting evidence that this, along with the 3 per cent stamp duty levy on the purchase of extra housing and other measures affecting landlords' confidence, is causing a drop in the supply of long term rented homes when demand continues to increase.
David Smith, Policy Director for the Residential Landlords Association, said:
“Government policy is actively encouraging the growth of holiday homes at the expense of long-term homes to rent which many families need. This is completely counterproductive, making renting more expensive and undermining efforts to help tenants save for a house of their own.
“The Chancellor must use his Budget to give tenants a better deal by supporting good landlords to provide the homes to rent that they want to live in.”
-Ends-
Notes:
- Details of the Guardian investigation can be found at: https://www.theguardian.com/technology/2020/feb/20/revealed-the-areas-in-the-uk-with-one-airbnb-for-every-four-homes
- Details of the research for ARLA Propertymark can be found at: https://www.arla.co.uk/news/january-2020/short-term-lets-could-see-tenants-leave-500-000-properties.aspx.
- The RLA's Confidence Index which found that in the last quarter of 2019 whilst 34 per cent of landlords planned to sell at least one property over the next year, just 18 per cent planned to buy one. Source: https://research.rla.org.uk/research-reports/landlord-confidence-index-lci-no-4-2019-q4/
- RICS' Residential Market Survey for January 2020 today notes: “In the lettings market, tenant demand rose at a steady pace in the three months to January (seasonally adjusted quarterly series), with a net balance of +24% of respondents citing an increase. At the same time, landlord instructions were reported to have fallen by a net balance of -13% of contributors, extending a run of negative readings for this series into a fifteenth straight quarter. Given this mismatch between rising demand and falling supply, rents are expected to increase over the coming three months, while twelve-month expectations continue to point to rents rising by a little over 2% in the year ahead.” Source: https://www.rics.org/globalassets/rics-website/media/knowledge/research/market-surveys/uk-residential-market-survey-jan-2020.pdf
- Hamptons International have pointed to the number of landlords being at a seven year low with average rents in January 2020 up 3.6 per cent on the same month last year as a result of continued high demand. Source: https://uk.finance.yahoo.com/news/landlord-buy-to-let-uk-numbers-mortgage-relief-stamp-duty-tax-122329336.html
- Figures from Knight Frank show that in London last year there were 6.1 prospective tenants for every rental listing, up from 4.7 in 2018. Source: https://www.telegraph.co.uk/property/buy-to-let/landlord-numbers-have-hit-seven-year-low-ones-still-game-reaping/
- Nearly four out of ten landlords believe that tenant demand for residential property will increase over the next 12 months according to research by Paragon. Over a quarter experienced an increase in tenant demand during the final quarter of 2019. Source: https://www.mortgageintroducer.com/paragon-landlords-predict-2020-growth-in-tenant-demand..
- The annual growth in private residential rents has almost doubled to 2.6 per cent, up from 1.4 per cent a year ago, as demand increases in the face of a decline in rental supply, according to findings reported by Zoopla published in January. Source: https://www.zoopla.co.uk/press/releases/rental-growth-hits-three-year-high-on-lack-of-rental-supply/
- HMRC note that the restrictions on mortgage interest relief eluded instances “where the property meets all the criteria to be a furnished holiday letting.” Source: https://www.gov.uk/government/publications/restricting-finance-cost-relief-for-individual-landlords/restricting-finance-cost-relief-for-individual-landlords
- Further information about the RLA can be found at http://www.rla.org.uk/aboutus or by following it on twitter @RLA_News
- For further information please contact Ed Jacobs on 0113 278 0211 (office), 07706386773 (mobile), or by emailing ed.jacobs@publicaffairsco.com