Rocketing house prices and deposits over the past 20 years have priced many first-time buyers out of the market
Many commentators have blamed the buy-to-let market for pushing up prices and squeezing first-time buyers out.
In an attempt to rebalance the market, the Government has come down hard on landlords.
In 2016, the then Chancellor George Osborne introduced a raft of measures to curb the sector.
A 3% stamp duty surcharge was brought in on buy-to-let and second homes, making the cost of buying a property even more expensive.
Tax relief for landlords has also been gradually phased out since 2017. From April, landlords will no longer be able to deduct rental expenses from mortgage income and instead will be able to claim a 20% tax credit.
Charging letting fees has also been banned and landlords are only allowed to take five weeks’ rent as a deposit.
Buy-to-let has traditionally been seen as a good investment, with many landlords looking to invest in property to supplement their pensions.
However, government interference in the market is increasingly making buy-to-let less appealing.
Many landlords feel the Government has made them a scapegoat for the housing crisis in order to grab votes, and are now looking to get out.
The policies have had some success, with more first-time buyers getting on to the property ladder last year than at any time since the financial crisis, but at what cost?
While the Government has had the best of intentions, messing with the property market is having a huge impact on the rental market and ultimately, it will be tenants who suffer.
Landlords are seeing their profits fall and are already selling up, reducing the supply of rented properties. Increased costs for landlords are also being passed on to tenants.
More tenants are entering the market and, combined with the squeeze on supply, rents are being pushed higher.
Some of the landlords I have spoken to feel disillusioned with the Government and don’t feel the extra income is worth the hassle any more.
According to research from Rightmove released last year, almost a quarter of landlords are planning to sell.
While landlords leaving the market will help to free up supply for first-time buyers, it could prove to be disastrous for tenants. Demand from tenants is increasing and reductions in supply could result in rents being pushed up further.
A recent report by ARLA Propertymark also found that 230,000 landlords are considering switching to short-term lets as they offer bigger profits, which could exacerbate the problem.
Things are likely to get worse for landlords before they get better. With the Budget nearly upon us, landlords are unlikely to get much help from the new Chancellor.
There are also plans for Section 21 ‘no fault’ evictions to be scrapped, making it more difficult to evict tenants at short notice. There are fears that this could disincentivise investment and lead to a landlord exodus.
The National Landlords Association (NLA) warns that if Section 21 is abolished there could be 960,000 fewer homes available to renters if landlords pull out of the market.
While the Government has opened up housing for some renters who were competing with buy-to-let, getting on the property ladder is nothing more than a pipe dream for many.
Government policies that cut the rental supply are only going to drive rents up and do little in the long term to get more first-time buyers on the property ladder.
Most landlords are ordinary, hardworking people who want to do the best for their tenants, with a small minority of rogue landlords giving the sector a bad name.
Demonising them helps no one and the Government has to realise the valuable contribution they make to society by providing rented accommodation.
Housebuilding rates continue to fail to meet Government targets of 200,000 a year, and this is where the real problem lies.
Rising homelessness and sky-high house prices highlight the need for more social housing, while the number of tenants stuck in the rental sector suggests the system is broken.
The vast difference in property values across the country is also another problem that needs to be tackled.
If the Government wants to fix the housing crisis it needs to address the imbalance of supply and demand by building more starter homes.