Government should introduce new initiatives which will encourage landlords to expand their portfolios and help to stabilise rental prices according to Landlord Assist, the nationwide tenant eviction and rent collection firm.
Its comments come as the trend towards renting rather than buying shows no sign of slowing down as first time buyers continue to struggle to get on the property ladder due to the high deposits demanded by most lenders.
With demand for rented accommodation forcing rents to rise to record levels, some tenants face being trapped in the sector and the prospect of never being able to buy their own property.
This may appear to be good news for landlords who prefer the security of higher rental yields and fewer void periods.
But the reality is that it could lead to a greater housing crisis because a restriction in the supply of rental property will lead to more people being priced out of the market by rising rents, whilst landlords are unable to expand their portfolios, which is desperately needed to address the demand and help to stabilise rent prices.
Chancellor George Osborne has taken steps to ease the housing shortage by introducing a Help To Buy scheme, which is designed to assist people to get a foot on the property ladder by increasing the availability of mortgages to people who cannot afford a large deposit. But Graham Kinnear, Managing Director at Landlord Assist feels that a similar scheme is needed to encourage landlords to expand their portfolios. This would help to stabilise rental prices and make it easier for tenants looking to save for a deposit whilst renting. He says:
“It is essential that the Government provides incentives for landlords to encourage them to buy more properties.
“The Chancellor George Osborne missed a great opportunity to boost the sector by not extending the new Help to Buy scheme to landlords. This would not only have addressed the imbalance between supply and demand, but helped to stabilise the level of rents in the process.
“There are many people who are trapped in the rented sector at the minute, and taking steps to stabilise rent prices would enable tenants to save a deposit for a home whilst they are still renting and provide landlords with an incentive to grow their business.
“High rents are a symptom of a lack of supply, so the best way to stabilise rents is for the banks to provide accessible finance in order to encourage landlords to return to the market to purchase more properties. Extending the Help To Buy scheme to include landlords or introducing a similar initiative would benefit both parties, landlords would be able to expand their portfolios and tenants will have greater choice and stabilised rental prices.
“The alternative is a continuing housing crisis, resulting in a generation who can never own their own home and rents which will continually rise above levels of inflation and become increasingly unaffordable, leading to greater numbers being priced out of the market and tenants, who face rising rents, potentially falling into arrears with their landlords.”
Stephen Parry, Commercial Director at Landlord Assist says:
“The rental sector has played a key role in helping to address the housing shortage in recent years so it makes perfect sense for the Government to include the sector in its housing plans. Supporting landlords as well as first time buyers would have given the economy a welcome boost by creating movement in both the purchasing and rental markets.
“Increasing the supply of rental properties would help to regulate rental prices and go some way to helping tenants who may feel trapped in the rental market.”
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