Private rental sector needs Government help

The rental sector is increasingly seen as key to future housing strategy as production of new homes is out of line with consumer demand.

ARLA's most recent survey of the PRS noted that the balance of supply and demand in the sector is already climbing towards pre-recession rates.  Central London has seen particular bounce-back as the number of tenants looking for property begins to outstrip the number of properties available - with 19% of ARLA members reporting more tenants than properties, compared with 6.9% six months previously.

ARLA's Operations Director Ian Potter, said: "The reality of the UK housing market is that the PRS shoulders the burden of the lack of housing supply both now and in the future.  What is also manifestly apparent is that landlords need governmental assistance in ensuring that stock is of the quality that modern housing standards demand."

ARLA believes the following actions need to be undertaken by the Chancellor in his Pre-Budget Report:

Removing VAT on the purchase of materials and labour for capital expenditure to improve older property brought into the rental market;

Introducing capital allowances for landlords improving housing stock over a certain age;

Increasing the Landlords Energy Saving Allowance (LESA) to include the installation of central heating systems;

Examining a Stamp Duty ‘clawback' to purchasers of older properties where a survey report and an Energy Performance Certificate show a property is likely to benefit from capital investment.

"It is also imperative that landlords can access affordable mortgage finance," Mr Potter explained. "If the PRS is going to continue to support the nation's housing demands and improve the quality of its stock, the Chancellor must recognise the need to support the UK's private landlords.

"Landlords, in general, are not treated as businesses within the fiscal regime. This is a real disincentive to producing well managed, well maintained, property for certain parts of the market."

"One issue for the PRS is that incentives based on improving existing stock may attract those investors who renovate and then resell very quickly - which actually inhibits growth for the sector," continued Mr Potter. "Therefore it will be important that any ‘clawback' function to be based on the condition that property is upgraded and kept for a certain period and maintained throughout."

The Government estimates that approximately 750,000 homes in the private rented sector are below standard, which roughly equates to 25% of properties in the sector.

Whilst significant progress has been made in the social rented sector to increase the quality of housing stock through the Decent Homes programme, little has been done to incentivise private sector landlords to improve the quality of their housing stock.