Philip Hammond is once again being urged to reverse the previous chancellor George Osborne’s deeply unpopular tax reforms as they are having far-reaching implications for the private rented sector.
The government has long been warned that its plans to strip buy-to-let landlords of mortgage interest tax relief would result in rent increases for tenants across the UK, and new data appears to support that claim.
Restricting mortgage interest relief for landlords to the basic rate of income tax has deterred many would-be buyers from investing in buy-to-let property, reducing the supply of much needed new homes in the sector at a time when demand from tenants is rising.
Fresh data from haart shows that the number of landlord registrations dropped by more than a third during January when compared with the corresponding month last year.
According to haart, the number of landlords registering to buy property increased by 2% between December and January, but dropped 37.4% year-on-year.
The supply-demand imbalance has pushed rents up across many parts of England and Wales, led by London where they are up 6% year-on-year.
Paul Smith, CEO of haart, said: “The lack of new homes to buy has, in turn, pushed up rental prices [in London] by 6% on the year to a record £1,924, as Londoners scramble for rental accommodation as an alternative to buying a home.
“This is a not a fault of Brexit, but rather a consequence of the government’s misguided efforts to reform the property market with taxation on buy-to-let landlords.
“Until buy-to-let taxation is relaxed, we can expect rents to rise throughout 2019 and tenants will increasingly be faced with difficulty when finding a new home in the capital.