The increased Stamp Duty and income tax introduced by the government recently are beginning to hit the rental market hard in all regions of the UK, RICS’ latest Residential Market Survey reveals.
In a strongly worded statement from RICS, it warns that fewer landlords have been listing properties with letting agents for eight months in a row, with the greatest reduction reported so far in July.
“This pattern is symptomatic of the shift in the mood music in the Buy to Let market in the wake of tax changes which are still in the process of being implemented,” the report says.
The tax hikes, which include relief reductions that are still being implemented through to 2020, are also pushing up rents.
Buy-to-let property supply is reducing as landlords exit the market or stop buying new properties but tenant demand is increasing as first time buyers struggle to get on the property ladder.
Push up rents
This will push up rents across the UK on average by 2% over the next two years but by 15% by 2023.
“East Anglia and the South West are viewed as likely to see the sharpest growth over the period,” the report says.
Abdul Choudhury (left), RICS Policy Manager says: “Our survey suggests that recent Government policy and legislation changes have impeded the growth of the Private Rented Sector (PRS), which is a vital part of a functioning homes market.
“Withdrawing tax breaks that small landlords relied on, placing an extra 3% on second home Stamp Duty, and failing to stimulate the corporate build to rent market, has understandably impacted supply.”
Adam Male, Director of Lettings at online agency Urban.co.uk (right) says: “The cost of homeownership remains vastly unaffordable for the masses but the number of properties available for those resigned to the rental sector is shrinking, while the cost of securing them grows larger.
“It’s time the Government started working with the UK’s landlords rather than against them. They must loosen their current stranglehold and find a solution that is beneficial for both sides of the lettings coin.”