"Growing taxes, uncertain costs associated with the Renters' Rights Act and the ongoing housing benefit freeze will create the perfect storm for tenants"
- Ben Beadle - NRLA
Ministers are facing mounting pressure to address rising costs in the private rented sector, as soaring buy-to-let mortgage rates threaten to push rents higher across the UK.
Financial information website Moneyfacts has warned that landlords taking out a mortgage now face paying an average of £1,100 more a year than they would have at the start of March, driven partly by ongoing conflict in the Middle East. The organisation cautioned that the burden is likely to fall on tenants through higher rental payments.
Cost pressures mount on multiple fronts
The mortgage rise is only one of several financial pressures currently facing landlords. Others include:
- A planned increase in income tax on rental income from next year, which the independent Office for Budget Responsibility has warned will push rents higher.
- Uncertainty over the fees landlords will need to pay to join the proposed Private Rented Sector Ombudsman and database, as set out in the Renters' Rights Act.
- An expectation that landlords will need to spend up to £10,000 per property to meet new government energy efficiency requirements.
The National Residential Landlords Association (NRLA) argues that most landlords cannot absorb these growing costs without passing them on to tenants.
According to HM Revenue and Customs data, the average rental income declared by unincorporated landlords stands at £19,400 a year, which is less than the equivalent of a full-time minimum wage salary.
Tenants bearing the burden
Low-income renters face a particular squeeze. Rising rents, combined with a continuing freeze on housing benefit rates, are tightening the pressure on those least able to cope.
Some have called for rent controls as a solution, but the NRLA warns these would reduce the supply of rental homes at a time when demand is already outstripping availability. Zoopla data shows an average of almost 5 tenants competing for every available home to rent.
What the NRLA is calling for
The NRLA is urging the government to develop a plan to ease cost pressures across the market. Its proposals include:
- Scrapping next year's income tax increase on rental income.
- Keeping fees for the Private Rented Sector Ombudsman and database as low as possible.
- Reforming the tax system to better support energy efficiency improvements in rental properties.
- Unfreezing housing benefit rates to protect low-income tenants.
"Whilst the Government cannot be held responsible for the impact of the conflict in the Middle East, it should take action where its own policies will lead to higher rents," said Ben Beadle, chief executive of the National Residential Landlords Association.
"Growing taxes, uncertain costs associated with the Renters' Rights Act and the ongoing housing benefit freeze will create the perfect storm for tenants."
"With so many people reliant on the sector for a place to call home, ministers need to recognise the real-world consequences of their decisions. It is simply stereotyped nonsense that every landlord can somehow absorb ever-increasing costs indefinitely. They can't, and as a result, it is tenants who will suffer most as rents continue to creep up."
"The Government needs to take action to support renters and ensure a healthy, vibrant market."
