A Warning that the UK Faces a Critical Shortfall of Rental Properties
The Royal Institute of Chartered Surveyors (RICS) issued a stark warning that the UK will face a shortage of 1.8 million homes to rent by 2025, unless the government acts quickly to re-ignite the buy-to-let market.
Changes to Stamp Duty on 1 April 2016 mean that purchasers of second homes now pay a 3% higher rate of stamp duty than owner-occupiers, reducing the incentive for people to become private landlords. According to RICS, there are already clear indicators that this has had a negative impact on the market - 86% of landlords surveyed have no plans to expand their rental portfolio this year, and 58% of RICS estate agents have seen buy-to-let sales figures fall since May. This reduction in supply, combined with an increase in demand, will lead to a 'rental supply crisis'.
RICS is urging the Government to reverse the increases in Stamp Duty, in order to tackle this problem in the short term. In the long term, it recommends that the Government focuses on creating a new build-to-rent sector by incentivising investment in large-scale affordable rental properties, and facilitating their construction by promoting the use of brownfield sites. Such measures would not help 'Generation Rent' ever leave the rental market and get onto the property ladder, but with house prices continuing to rise and would-be first time buyers priced out of the market, perhaps the Government needs to take heed of RICS' warning.