Calls for Chancellor to rethink Private Rented Sector

Calls for Chancellor to rethink Private Rented Sector

It’s been a busy and tumultuous few weeks in the political world. First the vote for Britain to leave the EU, then David Cameron resigning, then Labour MPs turning on Jeremy Corbyn and forcing through another leadership election (just 10 months after the last).

Then, just as it looked like there would be a Conservative leadership election too, Andrea Leadsom pulled out of the race and Theresa May was crowned as our new Prime Minister by default.

She officially took over the reins of 10 Downing Street on Wednesday and has wasted no time in shaking up the existing Cabinet and arranging her own team.

This includes a new Chancellor in the form of her close political ally Philip Hammond, who moves from the position of Foreign Secretary to replace the outgoing George Osborne.

Now the Residential Landlords Association (RLA) has called for the new chancellor to reset the government’s approach to the Private Rented Sector.

George Osborne has been heavily criticised in recent months for what many in the industry see as excessively punitive measures on buy-to-let investors and landlords, including the additional 3% stamp duty surcharge and the cuts to mortgage tax relief that are being phased in from 2017.

The former chancellor said he was taking the steps to improve the chances of first-time buyers, believing that landlords were preventing this demographic from getting onto the property ladder by hoovering up all the spare stock.

The RLA, however, strongly disputes such a claim. Supported by a report from The London School of Economics (LSE), the RLA argues that only a small number of sales to landlords involve bids from both landlords and first-time buyers.

Osborne’s clampdown on the buy-to-let sector also comes at a time when it’s anticipated that around a million new rental homes will be needed over the next five years.

At a recent Treasury Select Committee, there was a warning that “addressing the “home ownership crisis” must not come at the expense of a shortage of homes to rent.”

With this in mind, the RLA has urged Philip Hammond to think again and change the government’s position on the PRS.

It says that forcing some landlords to sell up and withdraw from the market, as well as stifling further investment, will only serve to make it trickier for those who need homes in the private rented sector.

Currently, demand still massively outstrips supply, so surely the government should be encouraging more landlords and investors to enter the market, rather than seeking to punish them?

Many also believe that Osborne’s measures will simply push up the cost of rent even further, with landlords feeling they have no choice but to transfer the extra costs they accrue onto their tenants.

“Access to decent, affordable homes to rent is vital to supporting a flexible labour market, and ensuring that young people and families have a place to live,” Alan Ward, Chairman of the Residential Landlords Association, commented.

“Whatever the new government does to support home ownership, demand will continue to increase for homes to rent. The new Chancellor has an important opportunity to reverse recent punitive tax changes and support the majority of landlords who are providing good housing to their tenants to invest in the new homes we need.”

As Theresa May has already proven, she’s not afraid to take the “out with the old, in with the new” approach, so there is nothing to suggest that the government’s policies regarding the PRS are absolutely set in stone.

In this post-Brexit world, there is also no guarantee that policies set for implementation in 2017 (or beyond) will still be implemented.

Osborne ignored the many calls from landlords to rethink his stance on the extra stamp duty surcharge and cuts to mortgage relief, but we don’t know for sure if Hammond will take a similarly hard-line approach or whether he will instead seek to hold out an olive branch to landlords and investors and heal the wounds caused since 2015.