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NRLA Urges Chancellor To Adopt Cost of Living Plan for Private Rented Sector

The National Residential Landlords Association (NRLA) has urged the government to adopt a cost of living plan for the private rented sector as landlords and tenants struggle in the face of ever growing costs.

In a letter to chancellor Kwasi Kwarteng, who has faced fierce criticism over the government’s controversial September mini-budget, the UK’s largest association for private residential landlords warned that the soaring cost of living will make it more difficult for tenants to pay their rent and emphasised the huge impact of rising costs on landlords.

The letter comes amidst warnings that landlords with mortgages are facing a possible loss making scenario, with interest rate rises significantly pushing up monthly repayments – and the threat of further significant increases to the base rate in the coming weeks and months.

Ultimately, it points out that many landlords will be unable to sustain these costs indefinitely and called for the government to adopt its cost of living plan, which the NRLA says can be financed by a reported £1.5bn that has been underspent by the Department for Levelling Up, Housing and Communities.

Ben Beadle, NRLA Chief Executive, said:

“Both landlords and tenants are struggling with the cost-of-living crisis. We need a package that supports both to prevent rent arrears and sustain tenancies.

“Our proposals provide a pragmatic way forward that would have an immediate and positive impact on the private rented sector. We call on the Chancellor to act as a matter of urgency.”

The NRLA’s Cost of Living Plan

In its letter to the chancellor, the NRLA published a plan for tackling the crisis, including:

  1. A reform of the benefits system to tackle rent arrears, including unfreezing the housing benefit rates and scrapping the five week wait for claimants to receive their first Universal Credit payment. It also proposes that tenants should have the option for the housing element to be paid directly to the landlord.
  1. Widening Discretionary Housing Payments to include those not receiving benefits.
  1. Replacing the £400 Energy Bills Support Scheme with a direct payment to every household to use towards the increased cost of living.

Reverse the Restriction of Mortgage Interest Relief and End Stamp Duty Levy

A major part of the plan is centred around addressing the supply crisis in the private rented sector. It calls for reversing the decision to restrict mortgage interest relief and proposes ending the stamp duty levy on buy-to-let purchases. Research by Capital Economics has indicated the latter would mean nearly 900,000 new privately rented homes coming onto the market over the next ten years, providing the government with a £10bn boost to tax receipts.

What Should Landlords Do About Rising Costs?

Rising costs are a major concern for buy-to-let landlords up and down the country, so what should they do in these uncertain times?

For existing landlords, one option is to look for a fixed-rate deal, although this has become more difficult after many lenders pulled their products following the chancellor’s mini-budget announcement.

Many people may draw the conclusion that buy-to-let is no longer worth it, with some landlords selling up to look for higher yielding locations or seeking alternative investment opportunities.

Despite this, there are still plenty of opportunities to profit from property – often without needing to make a purchase, take out a mortgage, or own a property yourself. For example, one such route is to acquire shares in a Property Portfolio Buying Group, which does not involve a mortgage and therefore takes away the worry of increasing repayments eating into profit margins.

As ever, it is important to monitor the market closely and seek expert advice where possible.

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Important note: The information provided in this article is general in nature and does not constitute personal financial advice. If you are unsure whether an investment is right for you, please seek professional advice. If you choose to invest, the value of your investment can both rise and fall so you may get back less than you put in.