As Chancellor Jeremy Hunt prepares for the Autumn Statement, industry voices are calling for targeted support for both tenants and landlords in the Private Rented Sector (PRS).
With tenants facing escalating rents and landlords burdened by rising buy-to-let mortgage costs, urgent measures are needed, says Neil Cobbold, managing director of PayProp UK.
Cobbold highlights the challenges faced due to the freeze on the Local Housing Allowance (LHA) since April 2020. He said: “Rents in the PRS have risen significantly, yet the LHA covers only a small fraction of these costs. This leaves low-income families, who are the most vulnerable, with few affordable housing options.”
He also raises concerns about the potential impacts of abolishing Section 21, pointing out that tenants evicted for rent arrears under Section 8 could struggle to find new housing, possibly leading to an increase in expensive temporary accommodation for local authorities.
Cobbold suggests that raising the LHA would be a crucial step, one that is “long overdue” and could alleviate immediate pressures. He also addresses the supply issues in the sector, noting that while building more homes is a long-term solution, the government must not overlook current shortages.
Regarding landlords, Cobbold observes the strain caused by Section 24, which limits their ability to deduct mortgage interest costs from their taxable rental income. This policy, he argues, pushes higher-rate taxpayer landlords towards incorporating their properties, potentially leading to a reduced rental stock as some choose to sell off their properties.
As a solution, Cobbold proposes extending first-time buyer’s Stamp Duty Land Tax relief to certain tenants and incentivising landlords to sell their properties to other landlords willing to keep them in the PRS. These measures, he believes, would stimulate the sales market and help retain rental properties, preventing a shift towards holiday lets or second homes.
Cobbold concludes: “It’s a question of where the Government wants to spend the money. Do they want to raise the LHA rate to a realistic level? It would make a significant difference and it is long overdue.”
The upcoming Autumn Statement will take place on 22nd November.
