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Renters ‘face supply crisis’

Written by: Emma Lunn
Landlords are calling for the chancellor to scrap the stamp duty surcharge for second home owners.

The National Residential Landlords Association (NRLA) says the charge should be waived on the purchase of homes to rent where landlords invest in properties that add to the net supply of housing.

This would include developing new housing, converting large properties into affordable units, changing the use of a property from commercial to residential, or bringing one of the almost 650,000 empty homes in England back into use.

The stamp duty surcharge was introduced in April 2016. It means that buyers of a second property have to pay a 3% surcharge on the standard stamp duty rates.

The call comes as the Royal Institution of Chartered Surveyors (RICS) has warned that rents will rise because of demand for properties increasing, whilst new instructions from landlords continue to ‘dwindle’.

According to property website Rightmove, asking rents outside London increased in the fourth quarter of 2020 for the first time since 2011, leading to a record average of £972 a month. It warned that in the suburbs, towns and villages, available housing is lower than normal for this time of year, whilst demand is higher.

Ben Beadle, NRLA chief executive, said: “To have a tax on developing new housing is completely nonsensical at a time when more is needed. Supporting growth in the private rental market, alongside all other housing types, would provide a significant boost to the economy in the midst of the Covid-19 pandemic. Research published last year suggests that landlords inject over £3.5bn into local businesses across the UK.”

Another change the NRLA wants to see made is to ensure the tax system encourages the provision of longer-term rental property over short-term holiday lets.

From April this year the final phase of reducing mortgage interest relief for landlords to the basic rate of income tax will be completed. But this measure doesn’t apply to furnished holiday lets. This has encouraged landlords to remove some properties from the long-term market for use as short-term holiday lets.

Beadle said: “To be taxing long term homes to rent less favourably than holiday lets is simply bizarre. It completely undermines efforts by the government to encourage the provision of long term, secure housing.

“It is time for the government to realise that its tax policies have created a shortage of rented housing. This can only mean higher rents and reduced choice for renters. This is not going to do much for the levelling up agenda.”

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