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Wednesday, May 18, 2016

A landlord shortage - predicts LSE report

The LSE London have published a report 'clarifying the role of the private rented sector (PRS) in the UK and the contribution made to it by the Buy-to-Let subsection.'

The report evaluates how recent tax changes might impact on the sector, stating concern as to whether 'there will be sufficient landlords to continue to meet the continuing growth in tenant demand.'

The LSE Report Conclusions
  • Private renting plays and will play a key role in the UK’s housing system. It keeps pressure on the home ownership sector by offering households a clear alternative whether for the short or long term. It also plays a role as an alternative to the provision of social housing.
  • The continuing flow of regulatory and taxation changes being introduced and considered will slow the expansion of the PRS at a time when there are limited alternatives. However, on current trends demand for private renting is almost certainly going to continue to rise in both absolute and proportional terms. The key concern is whether there will be sufficient landlords to continue to meet the continuing growth in tenant demand. Any slowdown in the expansion in supply of privately rented housing arising from changes in taxation and regulation will put pressure on rents and household budgets.
  • Even if institutional investors enthusiastically enter the market, individual landlords will remain dominant – as they are across Europe. Shrinking the sector therefore does not seem a sensible way forward given what we know about unmet demand and need.
  • In an ideal world we could identify the goals of policy changes, establish a baseline and monitor outcomes to see if these goals were met. In this case however, the government’s goals are multiple and sometimes inconsistent and poor data make high quality monitoring difficult if not impossible. If we are to understand and manage the sector better, we need to improve the data as quickly as possible.

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