Scrap landlord levies to save the private rental sector

The private rental sector is not working as it should. Demand for rental housing is so high and the market is simply failing to meet it.
Amid indications that the government may increase capital gains tax, we need to be clear that it was tax increases over the past 14 years that have left tenants struggling to access the homes they need.
As chancellor, George Osborne’s approach was to tax rental housing more than homes for ownership, in the hope that it would “level the playing field” and help first-time buyers to get on to the property ladder.
Putting aside the Institute for Fiscal Studies’ warning in 2016 that — even before Osborne’s changes — the tax system was more favourable to homeowners, the statistics show that the former chancellor’s plan has both succeeded and failed.
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He did put the brakes on the rental market. That’s why, as Rightmove points out, there are now 17 inquiries for every available rental property — more than double the rate before the pandemic.
The imbalance between supply and demand leads to higher rents and leaves tenants with little or no buying power. Indeed, the Yorkshire Building Society found that there were 290,000 first-time buyers in 2023, the lowest number in a decade. The lack of supply also narrows choice for tenants with respect to where they can live. And given the lack of alternative housing available, it makes it more difficult to hold rogue and criminal landlords to account.
We welcome the government’s commitment to build more housing for owner occupation and social rent. However, demand is set to increase for private rented housing too. There are growing numbers of students, according to Ucas, while the Office for National Statistics projects an increase of 6.6 million people in the UK population by 2036. Rightmove’s analysis suggests that, even based on current levels of demand, about 120,000 more rental properties will be needed to bring price growth back to more normal levels of about 2 per cent a year.
Modelling by the consultancy Capital Economics suggests that scrapping the 3 per cent stamp duty levy on the purchase of additional homes would make almost 900,000 new private rented homes available across the UK. As a result of increased income and corporation tax receipts, it suggests that this would lead to a £10 billion boost to Treasury revenue over the same period.
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In light of the pressing need to boost housing supply, at the very least the government could scrap the stamp duty levy on landlords who choose to bring one of the 260,000 long-term vacant homes in England back into use. This would clearly require steps to encourage those sitting on such properties to sell them, but with more than 115,000 households in England in temporary accommodation, it is absurd to have so many properties unused.
This would be exactly the kind of policy called for by the District Councils’ Network “to stimulate retention and supply in the privately rented sector”.
In a public memo to the new government recently, the respected economist Kate Barker said: “Both institutional and private landlords have a critical role in the housing market.” We agree — and it’s time for policymakers to recognise this too.
Ben Beadle is the chief executive of the National Residential Landlords Association