Tenants are trapped in a buy to let log jam as the government deters landlords from renting out more homes that are desperately needed.
A tax crack down on landlords continues next April as the Treasury phases out mortgage interest relief for higher rate taxpayers.
The measure is discouraging landlords from buying more homes to rent – but the Royal Institution of Chartered Surveyors argues that the country needs 1.8 million more buy to lets by 2025 to keep up with demand.
Tax changes have put a brake on buy to let.
The sector expanded from 2.3 million homes in 2011 to 5.3 million in 2014, but RICS says almost nine out of 10 landlords have no plans to buy more homes and are unlikely to do so for the next five years.
Other financial measures that have impacted buy to let include a 3% surcharge on stamp duty when buying a home and a 10% surcharge on capital gains tax for landlords disposing of a buy to let.
Around six out of 10 estate agents belonging to RICS report buy to let sales have dropped since May.
The tax measures started in March and April.
“It’s time for Theresa May to get out her hard hat. We are facing a critical rental shortage and need to get Britain building in a way that benefits a cross section of society, not just the fortunate few,” said Jeremy Blackburn, RICS head of UK policy.
“With increasingly unaffordable house prices, most households will be relying on the renting in the future. We must ensure that it is fit for purpose, and the government must put in place the measures that will allow the rental sector to thrive. Any restrictions on supply will push up rents, marginalising those members of society who are already struggling.”