As the Renters' (Reform) Bill is
brought to Parliament, the independent Joseph Rowntree Foundation
has responded to claims that there has been an ‘exodus’ of
landlords from the private rented sector in anticipation of the
Bill.
It has been argued that the imminent
regulation of Section 21 or ‘no-fault’ evictions, along with tax
changes made in 2016 by that hit landlord profit
margins, are combining to drive landlords out of the market. This
has also been pointed to as the cause of recent above-inflation
increases in rent.
However, JRF finds that
rather than an exodus of
landlords, the number of landlords has been increasing in recent
years, despite tax changes.
-
Data from UK Finance shows that
the number of outstanding buy-to-let mortgages reached 2
million at the end of 2022, a new record high
and up 20,000 on the previous year
[1]
-
Data on Capital Gains Tax (CGT)
receipts for additional properties shows that the rate of
additional property disposals per year increased following
2016 and has remained at that higher level. Meaning that more
landlords are selling each year.
[2]
-
However, data on Stamp Duty Land
Tax (SDLT) receipts for additional properties have
far
exceededthe number
of property disposals in the CGT since data started to be
collected in 2016, indicating that more landlords are buying
homes each year than are selling them.
[3]
-
The SDLT holiday introduced during
the pandemic also led to a surge of investment in the private
rented sector as landlords benefitted from lower entry costs.
While these rates have fallen since, they have settled at
pre-holiday levels.
When landlords sell, homes do not
disappear and can create opportunities for first-time buyers to
buy these homes.
-
At the point that the private
rented sector showed a slight contraction after 2016, rates
of homeownership increased. [4]
-
Government should look to put in
place support so that if landlords do sell homes in response
to new legislation first-time buyers, local authorities and
housing associations are able to buy up those homes.
The situation facing renters in the UK
is extreme and greater protections are urgently
needed.
-
Landlords can currently use a
Section 21 eviction, otherwise known as a no-fault eviction,
to evict tenants with no need to give a reason and at short
notice giving them just two months to find a new home.
-
A majority (66%) of those who are
accepted by councils as homeless due to the end of a private
rented tenancy had their tenancy ended for a no-fault ground.
[5]
-
The private rented sector has the
worst quality homes of any tenure. Nearly a quarter of all
private rented homes (23%) fail to meet the decent homes – a
government definition of what makes a decent home, compared
to just 13% of owner occupied and 10% of social rented
homes. [6]
-
The solution to these problems is
greater regulation and failing to tackle them to prop up the
size of the private rented sector cannot be the
answer.
ENDS
Notes to
Editor
[1] Neal Hudson (2023) Market Commentary – February 2023.
Available at: https://builtplace.com/market-commentary-february-2023/
[2] JRF analysis of HM Revenue and
Customs [HMRC] (2022) Capital Gains Tax Statistics. Available at:
https://www.gov.uk/government/statistics/capital-gains-tax-statistics
[3] JRF analysis of HM Revenue and Customs [HMRC] (2023) Stamp
Duty Land Tax quarterly statistics. Available at: https://www.gov.uk/government/statistics/quarterly-stamp-duty-land-tax-sdlt-statistics
[4] Department for Levelling Up,
Housing, and Communities [DLUHC] (2023) Table 104 – Dwelling
Stock Estimates, by tenure, England. Available at: https://www.gov.uk/government/statistical-data-sets/live-tables-on-dwelling-stock-including-vacants
[5] JRF analysis of Department for Levelling Up, Housing, and
Communities [DLUHC] (2022) Detailed local authority level tables:
financial year 2021-22 in Statutory homelessness in England:
financial year 2021-22. Available at: https://www.gov.uk/government/statistics/statutory-homelessness-in-england-financial-year-2021-22
[6] Department for Levelling Up,
Housing, and Communities [DLUHC] (2022) English Housing Survey
2021 to 2022: headline report. Available at: https://www.gov.uk/government/statistics/english-housing-survey-2021-to-2022-headline-report/english-housing-survey-2021-to-2022-headline-report#section-2-housing-stock
