Buy-to-let clampdown has ‘backfired’ on Government, claim
Government attempts to level the playing field of home ownership through extra buy-to-let charges have backfired, research suggests.
Figures from listing website Home.co.uk show an 11.6% slump in available rental stock over the past six years.
Scotland has seen the most dramatic fall, with a 34.7% decrease in available properties to rent between July 2011 and June 2017, according to the research.
In Wales over the same period there has been a fall of 28.1% while South West England has seen a decline of 26.5%.
Just one area, the north east, saw a rise in supply since 2011, bucking the national trend with an increase of 33.4% in available property to rent.
Doug Shephard, director of Home.co.uk, says the areas with the biggest drops in supply have unsurprisingly seen some of the biggest rent rises.
Wales has seen rents increase by 11.3% over the last year and, during the same period, Yorkshire has seen rents rise by 8.4%.
In Scotland, the past six months have seen an increase of 5.4% in the average rent.
South west rents are up 5.7% over the past 12 months while in the south east the average rent increase is 0.9% and in the East Midlands the rise over the same period has been 4.5%.
It is a different story for those areas where supply is holding firm or rising.
London’s more modest dip in supply has seen rents fall by 5.3% over the past 12 months, while the north east has seen a drop of 8.9% over the past six months, indicating that the long-term increase in supply of rental properties is having a negative effect on rents.
Shephard said: “It is ironic that the government’s justification for tax changes in the private rental sector was to ‘level the playing field’ for wannabe homeowners.
“The result of this barrage of red tape and taxation, at both local and national government levels, has meant that the supply of rental properties has fallen behind demand in most regions thereby driving up rents. Of course, it’s not the first time that Government tinkering and tax grabs have backfired but the upshot for generation rent is appalling.
“The ‘elephant in the room’ for the Government is that record low mortgage interest rates have driven unprecedented investment in the PRS over recent years.
“Simply put, those already with significant home equity have been able to come up with deposits for properties intended to let whilst aspiring homeowners are as cash-strapped as ever as they pay out huge sums in rent. However, ultra-low interest rates and the associated pain for renters look set to persist for the foreseeable future.”