The private rented sector has a vital role to play in meeting the country's housing need, but it is under pressure from a tax regime that landlords and letting agents feel is disproportionate.
In the levelling up white paper, the UK government declared that it "will ensure home ownership is within the reach of many more people" and that "by 2030, renters will have a secure path to ownership".
For some, the 332-page document is light on the finer detail of how that will be achieved, so for now at least the pressure is likely to remain on private landlords.
A mounting tax burden and regulation of the past decade have amplified the general political misunderstanding of the vital role landlords play in the housing sector.
And there is clear evidence that more are heading towards the exit door – better incentivised by rising property prices in a hot sales market fuelled by its own supply versus demand issues.
Things need to change.
Propertymark members say the most significant of recent tax changes are the additional property taxes levied on the purchase of all additional homes across the UK nations.
From April 1 2016 landlords buying an additional property have had to pay an additional 3 per cent stamp duty land tax.
Since then, 67 per cent of member agents have seen a decrease in rental supply, and it is clear a review of all taxation relating to buy-to-let property is now needed to help re-energise the sector.
Reversing the cut in mortgage interest tax relief that was introduced in 2020 would be a good place to start.
Since then, private landlords have not been able to deduct any mortgage expenses from rental income to reduce their tax bill. Instead, they get a tax-credit, based on 20 per cent of mortgage interest payments.
This is less generous for higher-rate taxpayers, who under the previous arrangements effectively received 40 per cent tax relief on mortgage payments.
Until April 2020 UK taxpayers were required to calculate, report and pay any applicable capital gains tax on their annual self-assessment tax return. But now those disposing of a UK residential property are required to do so within 60 days of completion.
Reverting the process back to end-of-year reporting would enable them to manage their portfolios more flexibly.
Removing VAT on renovations and home and energy efficiency improvements would bring landlords in line with the 0 per cent rate on new-build properties.
Other regulatory changes requiring landlords to improve the energy performance of their properties, proposals to scrap Section 21 notices in England, and a host of stricter letting laws coming down the line in Wales (Renting Homes Act), Scotland (draft rented sector strategy) and Northern Ireland (private tenancies bill), also weigh heavy on landlords’ minds.
Propertymark’s latest Private Rented Sector survey shows the number of new prospective tenants registering with member agents is 20 times higher than the number of properties coming to market.
And an average of two rental properties per member branch are being withdrawn from the market and sold, rising to five in Wales.
There is no doubt a contributory factor to this disparity between supply and demand is a disproportionate tax regime.
An unwillingness to review it could have the unintended consequences of fewer properties available, higher rents and lower quality housing.
Timothy Douglas is head of policy and campaigns at Propertymark
