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Politicians have done nothing but hammer landlords – with dire consequences

Hunt Sunak
The upcoming Budget should reverse the restriction to mortgage interest relief and scrap the stamp duty levy - Jessica Taylor/AFP

In July 2015, the newly elected Conservative-only Government used its first Budget to choke off investment in private rented homes, setting the scene for an unprecedented crisis of supply.

The restriction on mortgage interest relief for landlords struck the viability of properties already let to tenants, whilst a 3pc stamp duty levy on the purchase of additional properties, introduced a few months later, disincentivised new investment.

The consequences for tenants have been dire. According to Rightmove, there are now 11 prospective tenants enquiring about every available rental property.

Our own research finds that although 63pc of landlords report demand for properties increasing, they are three times more likely to be selling, rather than purchasing, new rental homes.

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The crisis in supply is stripping tenants of the choice about where they live, driving up rents and making it more difficult for renters to save for a home of their own.

All this was eminently predictable. Indeed, the Chancellor at the time was warned of the inevitable consequences, as were all his successors along with the myriad of housing ministers.

If reports are to be believed, the only measure we will see in Wednesday’s Budget that may have any impact on rented housing will be to increase taxes on the provision of holiday let accommodation.

It is true that some of the reduction in supply of long-term rented housing has been caused by landlords moving into the short-term lets market as a result of a more favourable tax regime.

Removing this may discourage further switches, but it is not going to do anything to increase the amount of rented housing.

Demand is almost certain to continue to grow, as a result of growing numbers of students, an increasing population and difficulties for many in affording a deposit to buy their own home.

The Chancellor must change course. The upcoming Budget should reverse the restriction to mortgage interest relief in the rental market and scrap the stamp duty levy on the purchase of homes to rent.

This call is backed by the Institute for Fiscal Studies, among others. The cross-party District Councils Network has argued that boosting the supply of private rented housing is a key part of tackling homelessness.

Even the Labour chairman of the housing select committee has dubbed the mortgage interest relief change a “knee jerk” measure for which the full consequences were not properly considered.

An independent analysis by Capital Economics found that scrapping the stamp duty levy would see almost 900,000 new private rented homes available across the UK over the next 10 years.

This would boost the Treasury’s coffers by £10bn as a result of increased income and corporation tax receipts.

Increasing supply in the rental market is the only real way to alleviate the pressures renters face and would actually increase government revenue.

The Treasury should recognise it as a win-win. Across the country tenants are crying out for a place to call home. It’s time the Chancellor acted to address their concerns.

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Ben Beadle is chief executive of the National Residential Landlords Association.