With the Budget set for next month, the Chancellor of the Exchequer needs to make it more attractive for landlords to invest in the private rented sector in central London to ensure young people starting out on a career are able to find a home to rent, according to the chief executive of leading estate agents Winkworth.
In Winkworth’s latest episode of The Property Exchange podcast on the rental markets in London and the country, Dominic Agace said many landlords have sold off investment properties in central London, following tax changes on mortgage relief available to landlords and the introduction of a 3% surcharge on second property purchases – which has led to a reduction in available rental properties.
He commented: “30% of homes in London are in the private rented sector. Young professionals coming to work in London to build a career need to be based in the capital and it is critical that housing stock is here and affordable. It is important that they are able to come to ensure our continuing status as a global centre. There has to be a balance of fairness between tenant and landlord.”
He added: “Prices in central London have come down so it is a good time to invest and make the most of the capital growth and increasing rents as people return to the capital. However, landlords need some fresh encouragement from the Chancellor to invest in London.”
Speaking as the podcast was released, Dominic Agace warned that further tax penalties on landlords called for by Sir Keir Starmer at the weekend, in a speech to the Local Government Association confererence, could lead to a reduced number of rental properties and higher rents.
Dominic Agace said: “This could push landlords to sell off more properties, reducing supply and leading to rent increases – which would be more costly to working people needing to rent than the 1.25% rise in National Insurance.
“A healthy private rental sector is essential and landlords can’t be pushed much further in areas such as London where yields are already very low and rents have declined significantly as a result of the pandemic.”
Lisa has seen an influx of renters from London looking for a house with a garden in a village setting over the past year, as a result of the pandemic. Many are looking to rent while they explore the local area, with a view to buying eventually. She said: “People are planning to commute two or three times a week and want short-term tenancies, while they explore the area, while landlords are looking for two to three year tenancies.
“I have five or six good quality tenants lined up for every property – and that is even before I have advertised it. Pre-pandemic, there was more choice, more stock. Now it is more difficult. Applicants are offering on or above the guide rent.”