What the Chancellor Should Address to Better Support Landlords and Tenants: NRLA

As the budget announcement nears, the National Residential Landlords Association (NRLA) has presented urgent issues that need the Chancellor’s attention to address the rental market's challenges. For landlords, tenants, and investors, this is a crucial opportunity to drive changes that improve rental supply, support energy-efficient homes, and create a fairer tax landscape.

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Expanding Tenant Choices in a Competitive Rental Market

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With rental demand outpacing supply, tenants face fewer choices and higher rents. According to Zoopla, around 21 potential tenants are competing for each available rental property—more than twice the pre-pandemic rate. This demand crunch restricts tenant mobility and may make it harder for renters to avoid problematic landlords.

To tackle these challenges, increasing the supply of rental properties is essential. Tina Paillet, President of the Royal Institution of Chartered Surveyors (RICS), urges the government to introduce measures that make housing more affordable for tenants. This includes removing the 3% stamp duty surcharge on buy-to-let properties that are refurbished and repurposed, especially the 250,000+ long-term empty homes across England.

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Avoiding Tax Hikes to Keep Rents Affordable

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Higher taxes on the rental market ultimately impact tenants through higher rents. Paul Johnson, Director of the Institute for Fiscal Studies, highlights this connection: “The more harshly landlords are taxed, the higher rents will be.” Ongoing policy changes have increased tax burdens on landlords, contributing to rental inflation.

For the rental market to stabilise, avoiding further tax increases on landlords is crucial to keeping rents manageable. By adopting pro-growth tax policies, the government can promote rental affordability without pushing out small-scale landlords.

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Supporting Energy Efficiency Improvements for Long-Term Gains

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In light of rising fuel costs and environmental concerns, energy efficiency in rental properties is another priority. The Committee on Fuel Poverty suggests that landlords could be encouraged to make energy improvements through tax incentives, low-interest loans, or even grants—particularly for properties in low-rent areas where profitability is a challenge.

Supporting landlords in adopting green upgrades will benefit both tenants and the environment, helping properties meet higher energy standards without steep costs passed on to renters.

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Providing Certainty on Housing Benefit Rates

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Housing benefit rates, known as the Local Housing Allowance (LHA), are a lifeline for many private renters. Ensuring that LHA remains linked to at least the lowest 30% of rental rates during this parliamentary term would offer much-needed stability.

The Joseph Rowntree Foundation estimates that if LHA remains frozen, tenants on benefits may see a yearly shortfall of around £700. This has significant implications for the affordability of private rentals, especially as other living costs rise.

Meera Chindooroy from the NRLA stresses the need for LHA adjustments, noting that "planned reforms in the Renters’ Rights Bill will fall short unless tenants have a genuine choice of where to live."

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Final Thoughts: Taking Action for a Balanced Rental Market

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The upcoming budget presents a vital chance for the government to enhance rental market stability through pro-growth tax incentives, support for energy efficiency, and fair housing benefit adjustments. A balanced approach can help create a fairer and more accessible rental market, benefiting tenants, landlords, and investors alike.

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For more insights on property investment, buy-to-let opportunities, and what this budget could mean for you, visit our website and explore our latest resources.

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