The private rented sector has such political importance, the chancellor needs to use his Budget to support both tenants and good landlords.
One-fifth of households are now in the private rented sector, of which almost 40 per cent include at least one child. While they still make up a large proportion of tenants, the era of the rental market being one chiefly for young, single people is over.
At the Residential Landlords Association’s fringe event at the Conservative Party conference, the housing minister, Kit Malthouse, spoke of the need for the sector to address its reputational issue.
We are fully aware of the challenge. There are a small minority of landlords who ignore the law, bringing misery to their tenants and undercutting the majority of good and decent landlords. They bring the sector into disrepute and need to be rooted out for good.
But the government’s own figures show that 84 per cent of private sector tenants are satisfied with their accommodation, compared with 81 per cent in the social rented sector.
Some 72 per cent of private tenants were satisfied with the way their landlord carried out repairs or maintenance, compared with 66 per cent in the social rented sector. This should not lead the sector to be complacent, but it does confound many of the perceptions surrounding private rented housing.
- One-fifth of households are now in the private rented sector
- The supply of homes for rent is now falling
- The government should revoke its decision to restrict mortgage interest relief for landlords to the basic rate of income tax
Against this backdrop, there is perhaps more than a sense of irony around the words spoken by the housing minister, given that many of the tax changes faced by the sector, and introduced by the previous chancellor, have reinforced a negative perception of landlords.
The decision to restrict mortgage interest relief for landlords to the basic rate of income tax, a new stamp duty levy on the purchase of additional properties and higher rates of capital gains tax in the residential property market compared with that charged on businesses, have fuelled the falsehood that landlords are to blame for the housing crisis.
There is an argument that such changes somehow level the taxation playing field between landlords and home owners, yet as the Institute for Fiscal Studies noted in 2016: “The tax system is not, and was not, even before the recent changes, more generous to people buying to let.”
Later in the same year, a report by the London School of Economics for Paragon Mortgages went on to quash the other myth the tax reforms were designed to address, namely that landlords are buying up properties that could have gone to first-time home owners.
The report noted: “The (very limited) research into direct competition between investors and putative owner-occupiers has found that only a minority of property sales to landlords nationwide involved bids from both types of buyer.”
It went on to observe: “In many markets there is no meaningful competition and first-time buyers on modest incomes can readily afford [to purchase] homes.”