South: UK facing a 1.8m shortage of rental properties, says RICS
The Government must urgently deliver 1.8 million new rental homes for UK families, warns the Royal Institution of Chartered Surveyors (RICS), as new figures show a sharp drop in the number of available properties.
With rising house prices making home ownership increasingly unaffordable, it is predicted that by 2025, 1.8 million more households will be looking to rent, rather than buy. However, new RICS figures show that 86% of landlords have no plans to increase their rental portfolio this year – with that trend set to remain for the next five years. Additionally, a net balance of 58% of RICS estate agents have reported a drop in buy-to-let sales since May.
The number of UK households renting property doubled from 2.3 million in 2001 to 5.4 million in 2014. However, earlier this year, the Government took measures to dampen the demand for buy-to-let investments by making changes to the Stamp Duty threshold. This has further reduced supply, arguably making a 2025 rental supply crisis more likely. The problem is expected to be exasperated next year when landlords’ right to deduct their mortgage interest from their income tax bill is removed.
RICS is urging the prime minister to abandon David Cameron’s previous home ownership focus and reverse April’s Stamp Duty measures in order to address short-term rental supply issues. However, they are recommending that the Government takes a much bolder long-term approach and pioneers a new build-to-rent sector, with the private sector encouraged to build properties specifically for residential letting. It would like to see pension funds incentivised with tax breaks to build large scale rental properties with affordable elements. Additionally, local authorities holding brownfields sites should be encouraged to release land for such properties.
Jeremy Blackburn, RICS head of policy, said: “It’s time for Theresa May to get out her hard hat. We are facing a critical rental shortage and need to get Britain building in a way that benefits a cross section of society, not just the fortunate few.
“Our latest figures show that there has been a 15% decline in house sales to first-time buyers over recent months. That tells us that for all the rhetoric, David Cameron and George Osbourne’s Starter Homes Strategy failed to get off the ground.
“The private rented sector became a scapegoat under the previous prime minister, and because of that it suffered. Yet with increasingly unaffordable house prices, the majority of British households will be relying on the rental sector in the future. We must ensure that it is fit for purpose, and the Government must put in place the measures that will allow the rental sector to thrive. Any restrictions on supply will push up rents, marginalising those members of society who are already struggling.”
