The Government recognises the need for a thriving, diverse and well managed private rented sector. Government policy seeks to promote investment in the supply of accommodation on the basis of long-term commitment to the sector and to discourage speculative investment, which serves only to drive up house prices and fuel rent increases. Recommendations for improvements to the sector, including measures to increase supply, were made by the commission on the private rented residential sector. The Government's response to these proposals, which was announced in January 2001, forms the basis for the reform of the sector and includes, inter alia, the establishment of a private residential tenancies board for facilitating speedy dispute resolution, the introduction of legislation to improve security of tenure as well as taxation incentives to encourage increased supply. Some of these taxation proposals have already been implemented in this year's Finance Act.
In addition to these measures aimed specifically at the private rented sector, a wide range of measures has been implemented by Government to maximise the supply of housing. Changes were recently made to investor stamp duty rates so that the owner occupier rates now apply in respect of new houses, with the 3% rate applying to properties up to £150,000 rather than the 9% rate which previously applied. This should assist in encouraging investment in the sector and increasing the supply of accommodation.
Section 50 of the Finance Act, 1999, provides an incentive to increasing the supply of purpose built student accommodation. I understand that returns received recently by the Department of Education and Science indicate that some 2,260 bed spaces have been certified by third level colleges under section 50 and a further 14,000 are at various stages of planning.
This Government has also improved the position of tenants in the private rented residential sector by twice increasing the ceilings for income tax relief. The ceiling in respect of rent paid by tenants under 55 was doubled. In the case of tenants over 55 a doubling of the ceiling, coupled with standard rating of the relief, means that 80% of such tenants gain a doubling of relief. A rent a room scheme was announced in the 2001 budget which provides for an exemption from income tax in respect of gross rental income of up to £6,000 per annum, for accommodation provided in a person's principal private residence. This measure will facilitate the provision of accommodation thereby easing the pressure on the private rented sector and will also improve the utilisation of the housing stock.