Why the Government Needs to Start Wooing Private Landlords

COOLING MARKET

It shouldn’t come as any great surprise to any private landlords reading this to learn a new study published this week warns that up to a million families in the UK are at risk of losing their home by the turn of the next decade.

What does come as a surprise, however, is the fact that homelessness charity Shelter, who so merrily campaigned for stricter tax regulation against landlords during the government’s recent private rental market consultation, didn’t fathom this out sooner.

Warnings have come home to roost

Time and again, landlord rights campaigners warned that private landlords would simply sell up if it would become unprofitable for them to rent properties. Well, the loss of the automatic 10 per cent wear and tear tax allowance last year didn’t help, but what did push most wavering landlords over the edge, was the passing of the Section 24 legislation taxing gross income.

The result of all this is not just fewer private rental properties on the market for individuals and families unable to gain access to social housing, but also higher rents in private accommodation as those hefty tax changes really start to kick in.

Shelter’s report concludes the reason the charity fears so many people being evicted in the next few years isn’t just down to increased private rents (although letting agents have to make up their lost fees too), but also low wages and benefit freezes.

Government and charities need to take off the blinkers

Of course, it wouldn’t be such a major problem in the first place if there was adequate social housing to go around. But there hasn’t been for a number of years and the situation isn’t getting any better. So instead of penalising private rental landlords the government should have been working hand-in-hand with them to ensure there was provision when their own housing arrangements fell through. Meanwhile, why didn’t Shelter – a charity which is familiar with how the property market operates – work this out sooner and warn the government?

In a proverbial shutting the stable door too late scenario they are starting to now as this section in the report ‘Shut out: the barriers low-income households face in private renting’ clearly shows:

“There is an assumption in housing policy that the private rented sector will be the default tenure for those priced out of homeownership or unable to secure a social tenancy, but this is increasingly not working.

“As the social rented sector contracts, private housing may have replaced it as the main tenure for people in housing need. But the market’s limitations mean that significant government intervention is needed if it is to play an expanded role in preventing homelessness and housing people on low incomes.”

By government intervention the charity doesn’t mean scrapping the ban on landlord tax mortgage tax relief payments, but rather the housing allowance freeze. It’s this shortfall and delay in benefits payment that is causing landlords to turn away from benefits claimants, often correctly assuming they won’t get their rent in time for their monthly mortgage payment.

Government needs private landlords to help with housing crisis

However, this really all boils down to the same thing – that whether it likes it or not, the government relies on the private rented sector, and private landlords in particular.

In the meantime the figures make sobering reading with Shelter claiming benefit payments fall short of private rental rents in 83 per cent of English local authorities. And it’s not only those claiming benefits who could be affected, according to their calculations. They say around 375,000 households with one person employed may also be hit, as could 211,000 disabled households if austerity continues or increases.

A total of 14,420 households were registered homeless in the last quarter of 2016 – 50 per cent more than in the same period in 2009. Most cases were due to people losing their private tenancy.

Are you a private landlord who has been affected by the Section 24 cuts? Let us know what you think in the comments section below.

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