A Tory peer has attacked current Conservative policy on the private rented sector and called for a new government to ditch ‘ill-conceived tax hikes on private rented homes which are stifling investment.’

The remarks by former Shadow Chief Secretary to the Treasury, Lord Flight, were first published on Conservative Home and come after a blistering critique of former Chancellor George Osborne from October last year and his ‘cash grab against landlords’.

Lord Flight gave short shrift to the ‘misguided belief’ of George Osborne’s Treasury that the unaffordability of house prices for new buyers was the fault of private sector landlords.

“(Mr Osborne) argued that private sector landlords enjoyed tax advantages over home owners and so out-competed first time buyers for properties for sale,” Lord Flight wrote.

“Yet the respected Institute for Fiscal Studies has made clear that landlords never had and do not currently enjoy a more favourable tax regime than home owners.

Although Osborne argued that his changes aimed to stop landlords buying properties that could have gone to first-time buyers, the London School of Economics declared that “only a minority” of house sales to landlords involve bids from both them and first-time home buyers.

Data published by the Council of Mortgage Lenders last year revealed that a homeowner borrowed 78 per cent of the value of a property, compared with 70 per cent for buy-to-let borrowers.

The increases in Stamp Duty buying costs inadvertently hastened the ‘drying up’ of the housing market in London and made it more difficult for first-time buyers.

Lord Flight, who served as Member of Parliament for Arundel and South Down, said: “The decisions to impose a stamp duty levy on the purchase of homes to rent out, coupled with restricting mortgage interest relief to the basic rate of income tax and the decision to tax a landlord’s turnover rather than profits, are causing many landlords simply not to invest further in much needed new homes to rent; or even to consider leaving the sector altogether.”

He added: “In short, the previous Chancellor’s assault on landlords exacerbated the housing crisis.

“By going on a cash grab against landlords his policies are serving to drive up rents; drive out investment in the sector at a time when the RICS suggests we need 1.8 million new homes to rent by 2025; and to push more tenants into the arms of the minority of unscrupulous landlords.

“The majority of landlords, providing good and decent accommodation, have concluded that it is simply not worth their while adding to their properties.”

More recently, he has slammed the Conservative Party’s latest manifesto on the grounds that ‘the future of the important private rental market got scant attention.’

He said: “(But) if we are to deliver on the ambitious target of 1.5 million new homes by 2022, we need a vibrant and growing private rental market.”

Noting that 20 per cent of all households are in the private rented sector, with accountants PwC predicting the figure will need to rise to a quarter by 2025, he said that ‘demand is set only to increase.’

The Government’s housing white paper backed the construction of rental homes by institutional developers, but failed though to provide the necessary support for the ‘individuals and small businesses’ who constitute the vast majority of the UK’s landlords.

“Arguments that private renting is too expensive, insecure for tenants, and insufficiently regulated to sustain good standards do not stand up,” he said.

“The English Housing Survey shows that the average length a tenant has been in their private rented home has now increased to over four years.

“The Office for National Statistics has shown that in the year to April 2017, private sector rents in Great Britain rose by an average of 1.8 per cent, below the rate of inflation at 2.7 per cent over the same period.”

He says that the ‘most effective way to ensure rents are affordable, and that tenants are able to exercise genuine choice over their housing needs’, is to boost the supply of homes to rent.

To achieve this, he says, the Conservative Party should ditch ‘ill-conceived tax hikes’ on private rented homes.

And in a direct shot at George Osborne, Lord Flight says that ‘anyone could have predicted’ the legislation would stifle investment in the sector.

Figures from the Council of Mortgage lenders which show that BTL purchases fell by 80 per cent in March compared with the same month last year, are concerning because for the ‘foreseeable future’, the private BTL market needs to be the main provider of the additional housing units needed, he argues.

He warned that rents would rise as a result of the tax changes, and make it harder for tenants to save for a deposit.

David Miles, a former member of the Bank of England’s Monetary Policy Committee, warned that landlords would need to increase rents by between 20 per cent and 30 per cent per cent to offset the impact of the tax increases.

Lord Flight said: “The mortgage interest restrictions need to be scrapped, and the stamp duty levy needs also to be cancelled where a landlord invests in a new property, brings an empty home back into use, or converts disused office or retail space into homes.

“It is perverse that this tax actively discourages investments in the much-needed new homes that add to the net supply of housing.”

He is calling for a programme that brings small plots of unused public sector land into use for rental homes, alongside the sale of larger sites.

“Local landlords developing on such sites are more likely to use the local SME builders whom we rightly seek to champion,” he said.

“To tackle the housing crisis we need more homes of every tenure.

“That is why the next Conservative Government must recognise and perceive the private rental market not as a problem to be attacked but as an opportunity to secure the homes we need.”

In the earlier article he praised the ‘conscientious’ way in which the Residential Landlords Association has represented the interests of its members by working ‘sensibly’ with Government and Parliamentarians to seek changes, by encouraging members to lobby their MPs.

He said: “As a former Member of Parliament I can tell you that few things focuses the mind of an MP more than receiving representations from constituents, especially if many are saying the same thing about how their constituents will suffer because of government policy.”

In the earlier article he praised the ‘conscientious’ way in which the Residential Landlords Association has represented the interests of its members by working ‘sensibly’ with Government and Parliamentarians to seek changes, by encouraging members to lobby their MPs.

He said: “As a former Member of Parliament I can tell you that few things focuses the mind of an MP more than receiving representations from constituents, especially if many are saying the same thing about how their constituents will suffer because of government policy.”