The importance of the private rented market in this country should not be underestimated – it is a crucial source of accommodation for a number of people, including those unable to afford to buy, and yet many investors are now starting to think twice about investing in the sector, following a raft of controversial changes, including the existing phasing out of mortgage interest relief.

Many landlords with low profit margins could soon end up making a loss as a result of the tax change, which will push some out of the market, and so it comes as no surprise that there are renewed calls for the cuts to mortgage interest relief to be axed ahead of the 2017 budget on 22 November.

The Residential Landlords Association (RLA) wants to see the changes scrapped in order to support those investing in the private rented sector, including the country’s small-scale landlords.

The RLA is also calling for action on the mortgage lenders who prevent landlords from offering longer tenancies that some renters want as well as the introduction of a scheme allowing tenants with good payment histories to have them recognised by credit reference agencies.

The association has put forward a number of proposals, including calls for the government to introduce tax incentives for those landlords willing to sell properties to sitting tenants, those offering longer tenancies and those investing in energy efficiency improvements.

The trade body believes that where a landlord is prepared to sell a property to a sitting tenant the 20% rate of Capital Gains Tax should be applied rather than the existing 28%.

DJS Research findings for the RLA report that 77% of private landlords would consider selling their property to tenants if the tax liability was waived.

The association would also like to see unused and abandoned plots of public sector land redeveloped as new sites for PRS homes.

The RLA points out that all projections are that the demand for homes in the private rented sector will continue, with predictions that 25% of all homes will be in the PRS by 2021. But supply is a major problem.

The government has encouraged greater institutional investment in the private rented sector but evidence shows that this will never be enough to meet the rising demand.

RLA chairman Alan Ward said: “RLA research shows many landlords have stopped investing in more properties as a result of recent tax changes, instead moving into short term holiday lets or ceasing to rent to groups deemed ‘high risk’ such as the young and those on benefits.

“These decisions have far-reaching consequences for a country in the grip of a housing crisis and we will do everything in our power to convince the government that this unfair tax must be reversed.”