The Mortgage Works - Nationwide’s buy-to-let lending arm and one of the UK’s largest providers – is asking the Government to use the Spring Budget to introduce four key actions that will help build a stronger private rental sector.
With increased regulation and taxation, many landlords are struggling, limiting their ability to invest in properties. Combined with higher interest rates, this is leading to reduced incomes, forcing rent rises and reduced funds to improve properties as pressure continues to make housing stock greener. Ultimately this makes the situation worse for tenants.
The Mortgage Works is calling for the following support for landlords:
- A moratorium on all but essential new regulation in the private rented sector following the introduction of the Renters (Reform) Bill: over the past decade landlords have faced a barrage of regulatory changes. The Mortgage Works is urging the Government to complete the passage of the Renters (Reform) Bill through Parliament as soon as possible and then provide a period for these changes to be implemented. A moratorium would provide certainty for landlords following a period of change and allow Government to assess the impact of the Renters (Reform) Bill on improving the sector. It will allow landlords to focus on providing quality homes for their tenants and fostering better landlord tenant relationships.
- Incentivise landlords to carry out energy efficiency work: failing to incentivise landlords to make their homes more energy efficient is leading to increased energy consumption, negatively impacting tenants, the sector and exacerbating the climate crisis. The Mortgage Works is urging Government to allow energy performance improvements to be deductible against rental income for tax purposes. This would help make energy performance investment more attractive for landlords, benefiting tenants and helping meet the UK’s net zero target.
- Increase funding for social housing: The Mortgage Works recognises that for many people, particularly vulnerable, would benefit from affordable social housing. The Government should ensure appropriate funding is available to deliver the additional 90,000 homes per year into the social housing sector, as recommended by groups including the National Housing Federation to relieve pressure on the private rented sector and to support those most in need.
- Review changes to mortgage interest relief and landlord taxes: The Mortgage Works is calling on HM Treasury to review the impact of the scrapping of landlord mortgage interest relief, with the aim of reintroducing this financial support to retain landlords in the sector if they are thinking of selling due to other cost challenges. As well as reviewing the additional three per cent, landlords have to pay on top of their normal stamp duty payment. This cost acts as a barrier to new landlords entering the market, which would provide additional properties. A review of the surcharge, including analysis of its impact on the supply of private rented housing, should be undertaken to assess its impact and set a future direction.
Damian Thompson, Director for The Mortgage Works said: “Landlords are a partner for the private sector and the Government in driving the economy forward. The private rental sector provides homes for where the UK workforce is needed most. However, the current taxation system is counterproductive, hampering progress within the UK economy, and negatively impacting tenants and landlords. Without the Government permitting landlords to offset mortgage interest against their rental income or making equivalent interventions, tenants will face reduced choice, increased rents and potentially less well-maintained homes, and the UK economy will suffer as a result.”
