UK faces critical shortage of homes to rent.
Surveyors predict shortfall of 1.8m within ten years unless government takes action.
The UK is facing a “critical” rental shortage sparking a need for a building programme for tenants, says the Royal Institution of Chartered Surveyors (Rics).
The group says at least 1.8m more households will be looking to rent rather than buy a home by 2025 and called on the government to offer tax breaks to promote construction and investment in the sector.
Tenancies are on the rise, with Rics estimating the number of UK households renting property rose from 2.3m in 2001 to 5.4m in 2014. However, demand could soon outstrip supply after April’s changes to stamp duty hit further investment in property by landlords.
Under the new regulations, anyone buying a home that is not their main residence must pay a three per cent stamp duty surcharge.
The contentious reform led to a spike in property purchases in March, with transactions sinking quickly afterwards.
A further amendment is set to hit landlords next year, when the right to deduct mortgage interest from their tax bill is expected to be withdrawn.
Rics proposes reversing the stamp duty increase, a move that could enrage first-time buyers, who regularly complain they are outbid by buy-to-let investors.
Communities Secretary Sajid Javid yesterday vowed the government would take “unprecedented steps” to encourage construction of homes for people to buy.
The UK’s housing shortage was “a huge issue for our country” and would be his “number-one priority”, he told the Conservative Party conference.
Despite gloomy forecasts, following BREXIT house prices have remained stable. With the average value rising from £211,231 to £215,008 since June, there are now 5,366 mortgages available – up from 4,736 in June, the month of the EU poll. According to consumer champion Which?, the average rate has fallen from 2.99 per cent to 2.85 per cent over the same period.
House prices could keep rising as demand bounces back
Experts continue to suggest a post-referendum crash in house prices will not come to pass, despite mortgage approvals slumping to a two-year low.
The Bank of England revealed mortgage approval numbers fell to a little more than 60,000 loans in August – down from around 61,000 in July and the lowest total in close to two years.
That was followed today by a report from Nationwide showing house price growth moderated slightly in September, rising by 0.3 per cent on the month and by 5.3 per cent compared to last year, although the Financial Times reports those figures are down from 0.6 and 5.6 per cent respectively.
But economists argue the latest survey of members by the Royal Institute of Chartered Surveyors (Rics), published earlier this month, shows the market is recovering.
Rics found the number of prospective buyers looking for a home continued to decline in August, but at a “greatly reduced pace”. Given that the number of properties coming to market remains subdued and fell again, this suggests demand is bouncing back and will continue to vastly outstrip supply.
It had been expected that the referendum result would put off buyers, as those looking for an investment would fear falling prices and those looking for a new home would not want to commit themselves at a time of potential economic strife.
The surprising resilience of the market coincides with improving consumer confidence, amid ultra-low interest rates and a relatively benign economic backdrop.
Mortgage approvals and sale data are also somewhat out of date by the time they are published – sale prices and mortgage applications tend to be agreed and submitted up to several months earlier.
“Much of the recent slowdown in approvals reflects the hit to buyer enquiries around the time of the referendum feeding through into the lending figures,” Andrew Wishart, of Capital Economics, told The Times.