The gap between supply and demand for available housing is widening in the UK. More and more people seek housing especially in city centre and urban areas where they live and work. This raises concerns about current tax legislation that is affecting buy-to-let property investments.
Propertymark, the UK's leading professional body for estate agents confirms that the number of properties for letting in the market is lesser and there may be three reasons why.
Investors Of Buy-To-Let Property Investments Hesitant To Join The Private Rented Sector
Would-be buyers hesitate at getting buy-to-let property investments. Propertymark, the UK's leading professional body for estate agents notes this may be due to the tax rules. Current legislation favours tenants while landlords and property investors are heavily taxed.
“The private rental market continues to be battered by the perfect storm of high demand, low availability and affordability issues that shows no sign of easing. Governments across the UK are all engaged in a tenant-focussed reform of their private rental sectors.” states, Nathan Emerson, CEO of Propertymark.
“To boost supply, they also need to consider the heavy tax burden on property owners, the impact of more profitable and less regulated short-term lets, many of which stand empty for part of the year, and the lack of new homes being built to cope with the varied needs of a growing population.”
Tenants Are Staying Put As Lack Of Buy-To-Let Property Investments Offer Less Housing Options
Another reason for less buy-to-let property investments is the tenant behaviour. Many tenants are renewing their tenancies rather than moving elsewhere. These tenants are not risking leaving while there is a lack of available lettings to transfer to.
It's interesting to note that Propertymark reported a steady increase in lettings applications. These applications have grown month-on-month since February 2021, further widening the gap.
Rent Prices Are Rising
The third reason is the increase in rent prices. The cause of this rise is the increase in mortgage interest rates, Propertymark notes.
The estate body states that 82% of its members are reporting steady rent increases since last year. The Office for National Statistics also notes that rent prices have risen by 3.0% in the 12 months to June 2022. In England, rental prices increased by 2.9%. In Wales, it grew by 1.9%, while in Scotland, it increased by 3.5%.
Propertymark recommends that local governments and city councils give their tax codes a review. Whether they respond to help landlords and property investors or not, the general sentiment is one of hope.
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