Tax breaks for private landlords ‘would ease rental crisis’

13 Jun 12
Private landlords should be given tax breaks to encourage them to provide cheaper long-term accommodation for people on low incomes, the Joseph Rowntree Foundation said today.
By Richard Johnstone | 13 June 2012

Private landlords should be given tax breaks to encourage them to provide cheaper long-term accommodation for people on low incomes, the Joseph Rowntree Foundation said today.

In a report examining the future of UK housing, the anti-poverty campaigner concluded that an ‘escalating crisis’ meant an extra 1.5 million people aged 18 to 30 would have to rent privately in the next eight years.

Housing options and solutions for young people in 2020 said many young people would never be able to own their own home. The foundation predicts that the number of homeowners under 30 will almost halve, with just 1.3 million expected to own their own homes in 2020.

This will lead to an influx of young people chasing private rented sector accommodation, making it harder for young families and poorer and vulnerable people to find tenancies.

Around 310,000 additional young families will be looking for private rented housing in 2020, and the report urged the government to take action to ensure the poorest 400,000 people are not excluded from the market.

This could include tax breaks for private landlords who offer more affordable rents and longer, more stable tenancies to vulnerable or low-income tenants.

The report concluded that there was international evidence to suggest that tax advantages were ‘the most prominent mechanism for incentivising individuals to bring forward private rented accommodation’. Changes to Stamp Duty Land Tax paid on bulk purchases announced in last year’s Budget, intended to reduce the barrier to investment in residential property, showed the government was willing to consider tax incentives, the report added.

There was also a need to address the long-term undersupply of housing to improve affordability, but there might not be enough time to provide the necessary homes by 2020.

The lead author of the report, David Clapham, professor of housing at Cardiff University’s School of City and Regional Planning, added: ‘With 1.5 million more young people no longer able to become homeowners by 2020, it’s vital we take the opportunity to make renting work better.

‘To do this we need strong political leadership that is willing to work with both landlords and tenants to make it more affordable and stable for “generation rent”.’

Kathleen Kelly, JRF’s programme manager for place, added that renting was likely to be ‘the only game in town’ for many young people in 2020, with fierce competition to secure a home.

‘With 400,000 vulnerable young people, including families, on the bottom rung of a three-tier private renting system, we need to avoid turning a housing crisis into a homelessness disaster,’ she added.

The research is based on qualitative and quantitative data, including interviews with more than 100 young people and housing stakeholders to identify the key housing trends.

Clive Betts, chair of the communities and local government select committee, said JRF had reiterated many of the committee’s own conclusions inlast month’s Financing of new housing supply report.

‘Young people clearly feel the effects of the housing crisis so we proposed a number of solutions for raising sufficient finance to see significant improvements in housing supply in England over the long term, including action to deliver more social and private rented homes,’ he said.

‘In particular, we highlighted the potential for substantially more investment by large institutions and pension funds, but like JRF we acknowledged that the private rented sector will continue to be dominated by smaller landlords. We therefore called on the government to bring forward proposals to simplify the tax regime in ways that will encourage such landlords to invest far more readily to build new homes.’


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