“There is little doubt that measures such as the stamp duty surcharge, restricted relief for mortgage payments and higher exposure to capital gains tax have been a significant disincentive for would-be landlords, constraining available rental homes for those who cannot get on the housing ladder or get access to affordable housing,” says Cook. “Inevitably, that has put continued upward pressure on rents … it is very difficult to see where new rental stock will come from.”
Use a carrot, not a stick
A lack of rental homes and the rising rents that follow from such a supply crunch are a huge problem for the social housing sector too. Local Housing Allowance, the funding set aside to place families into private rental homes, can no longer stretch to cover average rents in cities such as London. Research from London Councils has found that just 5pc of London’s private rental homes are affordable to people who use Local Housing Allowance to pay their rent.
Organisations such as Capital Letters, which support local councils in housing vulnerable people, are calling for an increase in Local Housing Allowance to be announced in the Budget too.
“We have spoken to small landlords who are eager to help families out of temporary accommodation but they just can’t make it stack up. These are responsible, ethical landlords who want a modest return whilst making society better,” says Sue Edmonds of Capital Letters.
“In order to regulate the industry, ensure safety standards, encourage the upgrade of rental units to become more energy efficient and entice good landlords into the sector to provide more homes and choice, the Government needs to use more carrot in this Budget,” adds Cook. “For too long, they have only used stick.”
Are you a buy-to-let investor planning to sell your property because of Labour’s reforms? Tell us about your experiences at money@telegraph.co.uk
