Propertymark has called for a full review of taxes which impact private sector landlords to help tackle the rental cost crisis.
This comes as Rightmove’s rental price tracker for Q3 2023 showed average rents outside London are 10% higher than a year ago, reaching a record £1,278 per month.
Meanwhile, Greater London prices rose by 12.1% year-on-year to £2,627 per month, and rents for inner and outer London went up by 11.6% year-on-year to £3,124 and £2,264 per month respectively.
Rightmove has attributed the rise in prices to disparities between supply and demand, with the average property in Britain receiving 25 enquiries from prospective tenants, compared to the eight enquiries per property during the pre-pandemic period.
Amid rising prices, Propertymark claimed a review of all taxes relating to private landlords is needed, in order to develop policies for long-term investment in the PRS and to reduce costs for tenants.
The changes recommended by the body include reviewing the mortgage interest tax relief, reducing additional taxes on BTL properties, and lowering capital gains tax thresholds.
Propertymark also suggested the reintroduction of a tax allowance for energy efficiency improvements carried out by landlords, and recommended avoiding rent controls.
Nathan Emerson, CEO at Propertymark, said: “The crux of the cost of renting crisis is that demand is far outstripping supply.
“Alongside building more homes, the government must recognise the impact of the current tax regime on the availability of homes in the PRS and ultimately the costs passed on to tenants.
“What we need is a full review of all taxes impacting private landlords in order to introduce pro-growth policies that can increase supply and bring down the cost of renting for tenants.”
Professionals within the BTL market echoed Propertymark’s sentiment.
Howard Levy, head of BTL lending at SPF Private Clients, commented: “Any reduction in taxation for landlords will allow them to pass on savings, but it would also enable more investors to come back into the sector after leaving due to profit reductions, and sometimes losses incurred, when previous tax increases were introduced.
“The current low stock levels would be bolstered if a good net return could be seen again in the PRS, and the landlords that previously sold their portfolios were enticed to return.
“With this increase in stock, the rents should certainly stop increasing at the levels we have seen recently and possibly then reduce as more rental stock comes to market.
Narinder Gill, associate at Coreco Commercial Finance, also agreed: “The recommendations by Propertymark would be very well received by landlords — to the benefit of the PRS and tenants all over the UK.
“It’s no secret that landlords have been forced to pass on increased tax burdens on to tenants and something that the government and treasury should take seriously.
“By adopting some of the changes proposed by Propertymark, it would no doubt contribute towards developers and SME’s increase housing supply and stock within the purchase and rental market.
“In essence, it is either higher returns or lower costs that will be the catalyst for the PRS, and with the ability to control the taxation costs, the likely option is apparent.”
Ben Beadle, chief executive at NRLA, added: “Tenants are bearing the brunt of the supply crisis in the rental market — this is a result of failed government policies.
“The government must take action to stem the loss of rental properties across the country; a good first step would be for the Treasury to encourage investment by reversing the damaging tax hikes which penalise landlords who provide much-needed housing.
