The impact of the Business Expansion Scheme on the supply of privately‐rented housing

Discusses the Business Expansion Scheme (BES) which was extended in 1988 to companies letting residential property on assured tenancies. This was intended to provide a stimulus to privately‐rented housing in the UK and to foster the development of more company landlords. Presents the results of research into the success and impact of the BES in the privately‐rented sector. In its nearly six years of existence the scheme attracted $3.4 billion of investment from private individuals,over 900 companies were formed and 81,000 dwellings were brought into the private‐rented sector at a cost of £1.7 billion in tax relief. While many of the new companies were not the new model landlords which the Government is trying to encourage (the scheme being adapted by universities, housing associations and mortgage lenders for their own purposes), the supply side impact has been considerable, accounting for up to one‐sixth of new privately‐rented properties and a more than doubling of the number of “commercial” company landlords. Although many non‐entrepreneurial company dwellings are likely to leave the sector in the near future, recent taxation changes may allow many commercial BES companies to continue letting.