London faces ‘critical shortage’ of rental homes
London is facing a “critical rental shortage” that requires a building programme to focus on providing for tenants, according to the Royal Institution of Chartered Surveyors.
At least 1.8 million more households in the UK will be looking to rent rather than buy a home by 2025, it claims.
The RICS has called on the government to offer tax breaks to encourage building and investment in the sector, despite Prime Minister Teresa May’s Conservative Party indicating its focus remains on home ownership.
The number of UK households renting property rose from 2.3 million in 2001 to 5.4 million in 2014, according to the RICS.
It adds that further investment in property by private landlords was hit by changes to stamp duty in April.
Anyone buying a home that is not their main residence must now pay a 3% stamp duty surcharge. This led to a spike in property purchases in March, with transactions falling quickly again after April.
The RICS claims 86% of landlords have no plans to increase their rental portfolio this year, with supply set to fall further after changes due next year will remove a landlord’s right to deduct mortgage interest from their income tax bill.
In addition to a reversal in the stamp duty increase, the RICS is also calling for:
- Private developers to be encouraged to build specifically for the rental sector
- Pension funds to be given tax breaks to fund the large-scale construction of rental properties
- Councils to be encouraged to release brownfield sites for building homes for tenants
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