Need to incentivise landlords urged
The UK government has been urged to incentivise landlords that accept tenants on social housing
The government has been urged to provide incentives to landlords in the UK that rent their property to those on housing benefits.
Speaking at the National Landlord Investor Show Conservative MP Ian Duncan Smith urged the government to incentivise landlords who let properties to social tenants.
He believes that private landlords provide a vital service by renting to tenants in receipt of local housing allowance or housing benefit. Encouraging them to stay in the market could be achieved with the reversal of the controversial changes to private landlords taxation in 2015, which has seen landlord profits shrink and driven many to leave the market altogether.
The 3% surcharge applied to the stamp duty payable on additional properties that weren’t the main home was in response, he suggests, to the amount of property being bought in London where the buyers had no intention of occupying it. As a result, all buy-to-let purchases were caught by the new rules. This was followed in 2016 by the phasing out of tax relief on buy to let mortgage interest, shrinking profit margins even further.
The Residential Landlords Association 2017 survey revealed that one-fifth of the poorest 10% of households are now renting privately, demonstrating the dependence of the social housing sector on private landlords.
The fact that the rent for social housing tends to be lower than the average rent, is proving to be difficult for landlords renting to tenants on social housing. Together with other factors such as the Universal Credit resulting in rent arrears accumulated by many tenants and the reluctance of mortgage lenders to finance landlords renting to tenants on housing benefits, it is proving difficult for some landlords to stay in the sector.
Duncan Smith told landlords at the event that he personally thinks there have been some mistakes. He added that it should be ensured that the social rented sector should be kept running and with reasonable margins so that [landlords] stay in it, otherwise it would be pressing to find rental properties for people, and some of that pressure is already existing.
He said this is one of the areas to come back to. He added that it is a social need and asked if it should be treated that way. The returns on it are not great so it should be seen what keeps people in the market.