Has the supply of Oxford rental properties peaked?

In Oxford just 46.7% of people own their own home vs. an English average of 63%.  28.2% rent from private landlords vs. an English average of 17%.  To put that into real numbers, Oxford has roughly 15,600 rented properties and around 37,500 tenants.  But, the level of home ownership continues to decline while the demand for rental properties continues to grow, because Oxford continues to be one of the country’s least affordable places to own a home.

Nationwide, the Royal Institute of Chartered Surveyors (RICS) forecast that there will be 1.8m households requiring private rented homes by 2025.

In September the Association of Residential Lettings Agents (ARLA) report that average available rental properties per branch to have risen to 193 from 183 in August, that is the highest level since April 2015.  In parallel the average number of prospective tenants rose to 40 per branch, up from 37 in August.

At current rates of growth, Oxford will require over 23,000 homes for people wanting to live in a rented property by 2025 or over 7,000 more than it requires today.  That’s around 17,300 additional people living and working in Oxford requiring rented accommodation.

These facts demonstrate the real risk behind the Government’s strategy of taxing landlords, risking that they will remove their properties form the private rented sector in favour of alternative uses – either short-term holiday lettings or releasing them for purchase by people who no longer rely on the private rented sector to live in Oxford.  Either way, the measures seem set to worsen an already acute shortage of rental properties.

Is this over-dramatic I hear you ask?  Well RICS doesn’t think so, they have called on Government to reverse many of the tax changes because of their likely impact.  And, when they are listed out, it is hard to draw any other conclusion:

·       Removal of 10% wear and tear allowance on furnished lettings;

·       Addition of 3% stamp duty on purchases over £40,000;

·       Removal of higher rate tax relief on mortgage interest payments staged over 3yrs from April 2017;

·       Capital gains tax payable within 30 days of a sale from April 2019.

From a Government that claims to be pro-entrepreneur and pro-investment, this is an unprecedented attack on a sector, which appears to risk unwanted consquences further down the line.