Tax - that’s why rents are rising so much...

Propertymark has given its view on why private rents have risen so much - 6.1% in England, 7.0% in Wales and 6.8% in Scotland in the 12 months to January.

The letting agents’ trade body says in 2015, then Chancellor George Osborne decided to reduce the available tax relief on mortgage interest costs and remove the 10% allowance for fully furnished homes, which has made letting effectively unprofitable for many landlords.

The 2015 tax changes have affected one student landlord, who agreed to speak to Propertymark on the condition of anonymity, who said that taxes are making it difficult for him to operate as a landlord as it feels like people in general are getting taxed more, and that rents keep going up as a result because they need to find a way to pay for those increasing taxes.

Since then various other tax and regulatory changes have increased landlord costs, often supplemented by expensive local council licensing. Even landlords effectively chased out of the sector have suffered with Capital Gains Tax allowances sharply reduced.

In a statement Propertymark gives the example of a private landlord, who said they would talk only on the condition of anonymity, explaining that landlords ‘are on the frontline politically’ and that it is tiring for landlords to be used ‘as the reason why rents are increasing when that is simply not true.’

They added: ‘Government support that would be most welcome for us would be tax support or the relaxation of existing thresholds. More importantly for me, I would be pleased to see any government be more aware of the positive work we do as landlords and be more considerate and positive towards the industry.

‘As a group (private landlords), we manage a huge percentage of rental property, effectively being partners to the Government in the accommodation supply train. I feel the press and Government’s attitude is biased towards tenants’ issues, and landlords face an uphill battle in this regard.’

The private landlord Propertymark communicated with, alongside Propertymark’s own data gathered by members, has recorded the volume of private rental properties dropping, which also causes rents to rise due to a shortage in supply and a surge in demand due to many people competing for the same property.

A 2022 Propertymark report titled A shrinking private rented sector, discovered that 53% of buy to let properties sold in March 2022 left the private rented sector and there was a 49% depletion in properties available to rent per member branch in March 2022 compared to March 2019.

The industry body is calling on the UK Government to create an economic environment that works for both tenants and landlords.