Software firm PayProp UK has appealed to the government to reserve Section 24, which replaced mortgage tax relief with a 20% tax credit.
Accountancy firm UHY Hacker Young, using data from HMRC, estimated that 70,000 buy-to-let landlords exited the PRS last year and 116,000 rental properties were lost to the sector.
Neil Cobbold, managing director of PayProp, said: “The private rented sector has been under the government spotlight in recent years and there is no doubt that this may have contributed to some landlords leaving the industry.
“While we welcome measures to improve the quality of housing in the PRS and strengthen tenant rights, we also believe that more could be done to both incentivise landlords to remain in the sector and to attract new investors.
“It has been widely discussed within the industry that the reversal of Section 24 may be such an incentive for landlords to remain even with more regulation. Being allowed to deduct mortgage payments from rental income before tax would make a huge difference to landlords’ bottom lines.”
As it stands 11% of homes for sale in the UK are former rental properties.
Cobbold also commented on the proposal to bring EPCs to a minimum of C by 2028, a deadline that Housing Secretary Michael Gove has hinted could be changed.
He added: “The UK has some of the oldest housing stock in Europe and the industry believes that the government should give some thought to offering financial support to landlords who might struggle to make the sometimes significant investment required. Extensive insulation work and the installation of new heating systems can be prohibitively expensive – especially in those parts of the country where rents are lower and it would take far longer for landlords to see a return.”
Cobbold said: “The demand for high-quality rentals is always going to be there and the government has got to find a way to attract investors who are interested in being the landlords of tomorrow. The country desperately needs more, newer, greener homes in the PRS – especially in areas of high population where demand has gone through the roof.”