Chancellor Rishi Sunak has been urged to scrap the 3% extra stamp duty that landlords pay when buying properties.
The call has been made by the National Residential Landlords Association (NRLA) which says research by independent consultancy Capital Economics reveals that cutting the duty would release some 900,000 homes into the rental market and generated £10 billion in additional tax revenues for HMRC over the next ten years, and more revenues beyond that.
The NRLA, which commissioned the research, says such a move is the only realistic way to plug the widening gap between supply and demand within the market, which has driven up rents recently.
Last month rental platform Homelet reported revealed that rents are rising by 8.5% a year across the UK and 12.6% in London.
Supply tightening
Even without the additional homes, supply will continue tightening, warns Capital Economics.
Over the next ten years between a million and 2.3 million additional private rented sector (PRS) homes will be needed, depending on growth in the owner-occupied and social housing sector, driven by a predicted 11% growth in the key 15-24 age group between now and 2032.
And even more worryingly, the research also points to a likely 500,000 reduction in the PRS over the same period unless the sector is made more attractive financially to landlords.
Ben Beadle (pictured), Chief Executive of the NRLA said: “The Government needs to wake up to a crisis of its own making.
Taxing landlords out of the market serves only to cut supply, increase rents and make homeownership more difficult to afford.
“The evidence clearly shows that the supply of rented housing is declining as demand increases and will continue to do so.
“The Government is taking a blinkered approach to the issue, which is not helped by its reluctance to admit mistakes it has made in the past.
“It makes no sense to tax the supply of new homes supplied by landlords investing in new build or bringing empty homes back into use. As this study indicates, removing the tax will actually generate more revenue, not less.”
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