The National Residential Landlords Association (NRLA) has put forward a case that increasing the supply of homes for private rent could significantly augment the UK Government’s revenue by £10bn. This figure aligns closely with the total budget of the Affordable Homes Programme, highlighting the substantial fiscal impact of such a policy shift.
Amidst a growing crisis in rental housing availability, the NRLA’s proposals, submitted in anticipation of the Budget on 6th March, underscore the acute demand in the sector. Current data indicates that each rental property on the market attracts enquiries from an average of 11 prospective tenants.
Further supporting this argument, independent research by Capital Economics demonstrates the potential benefits of abolishing the three per cent stamp duty surcharge on additional home purchases. Their findings predict that this change could lead to the creation of nearly 900,000 new private rental homes throughout the UK. Capital Economics’ analysis also suggests that this expansion would subsequently increase income and corporation tax revenues, resulting in a £10bn uplift to the Treasury over a comparable period. This sum is nearly equivalent to the entire £11.5bn budget allocated for the Affordable Homes Programme from 2021 to 2026.
The current stamp duty levy, introduced in 2016 by then-Chancellor George Osborne, aimed to alleviate competition for homeownership between landlords and families. However, this rationale was challenged by the London School of Economics, which found that in most cases, sales to landlords rarely involved competition with other buyer types.
The NRLA is advocating for the Chancellor to eliminate the Stamp Duty Levy in the upcoming Budget, a position echoed by Paul Johnson, Director of the Institute for Fiscal Studies (IFS). In a piece for The Times, Johnson warned of the adverse effects of heavy taxation on landlords, suggesting it would lead to higher rents.
Ben Beadle, chief executive of the NRLA, emphasised the urgent need for Government action to address the housing crisis, stating: “The Chancellor needs to pull out all the stops to tackle the housing crisis. Growing the private rented sector is not only vital if tenant demand is to be met, but it would also provide a substantial boost to Treasury coffers, enabling it to invest in vital public services. It makes no sense to discourage investment in desperately needed private rented accommodation. Inaction will only result in more misery for prospective renters.”
