The Government has already recognised the importance of expanding the rented sector. Encouraging more institutional investment, as it wants to do with its £1bn build-to-rent fund and £10bn debt guarantee scheme, is one route.
But it will be just as important to support the 89pc of individual private landlords who control almost three quarters of our private rented stock. Most are only part-time landlords and most have just one property that they rent out – but we know that many of them would like to grow their rental businesses if they could.
If we could encourage just a tiny percentage of this army of small landlords to invest in another home or two, we could provide thousands more homes for tenants who need them.
So what will help them to do that? First, we need a more flexible tax regime, which addresses some of the inequities that mean private landlords are treated less favourably than owner-occupiers and the social housing sector. Measures such as rolling over capital gains tax when sale proceeds are reinvested in a rental home, a fairer treatment of capital expenditure on repairs and improvements and VAT relief on substantial work would all help landlords to invest to improve standards.
They would create a more dynamic market, boost the economy through spending on construction and refurbishment – and bring in more revenue for the Treasury through increased turnover of properties.
We’d also like to see more help for smaller landlords who want to develop newbuild schemes for rent. They could make good use of small plots of public-sector land or empty buildings that wouldn’t appeal to bigger developers, perhaps with the public owner retaining an interest in the land and a covenant ensuring that the new buildings remained as rental properties for at least 10 years.
Councils would not only gain a new-homes bonus but also council tax revenue, and new homes transform eyesores of derelict land. All at no public expense.
And we’d like more flexibility over turning houses into small shared homes. It’s argued that the rules in this area are needed to prevent areas becoming student “ghettos”. Yet in many locations shared houses, ideal for younger professionals and key workers, make an effective use of our housing stock.
We’d urge politicians to turn their back on the calls for rent control and more regulation, both of which would discourage rather than encourage the investment we need. Instead of a populist stampede towards more red tape, we need a streamlined regulatory system that enables effective enforcement where it is really needed.
In that way we will see a sector that increases at a healthy rate, the best way of driving up quality and choice for tenants.
A growing private sector has a key role to play in tackling the housing shortage. Rather than bashing private landlords, we should help them to flourish. That will be good news for tenants and landlords alike.
Alan Ward is chairman of the Residential Landlords’ Association
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