A lack of available properties and the proposed increase to the rate of Capital Gains Tax presents a grave threat to the Private Rental Sector (PRS), according to the Association of Residential Lettings Agents (ARLA)
The PRS currently represents more than three million homes, and is a crucial component in offsetting the shortage of homes being built to house the growing UK population. ARLA believes that the new CGT policy could create a shortage in rental property supply as investors look to sell off their portfolios and the new policy could also deter future investors from entering the sector.

Ian Potter, operations manager of ARLA, said: "Our latest research shows that rent levels are now on the rise, indicating a potential market stabilisation but also highlighting the dearth of available rental properties.

"With the anticipated increase in Capital Gains Tax rates for non-business assets, we could potentially see a fire sale situation arise in the buy-to-let market with investors offloading properties. Consequently, the number of available rentals will greatly diminish and the fragile property market recovery could be threatened.

"There are some potential solutions, one of which is that landlords should be treated as exempt businesses. For example, could the new Government propose taper relief, or rollover relief into the CGT changes? We need clarity before this new Government risks damaging the confidence of the recovering property market."

ARLAs latest research reveals that almost a third of ARLA members (30.8%) felt that achievable rent levels had increased in the last six months. This compares with just 12.5% of members at the end of 2009. In central London the situation is even more prolific, where almost half (46.7%) of members surveyed reporting an increase in achievable rent levels.

Potter said: "As the new government plans its first steps, it is vital that there be a concerted focus on the PRS. For months we have emphasised that specific measures are needed to encourage the creation and improvement of rental accommodation - to no avail.

"Now, we appeal to the new coalition government to implement solutions that will ensure the long-term availability of enough affordable rented accommodation. This includes treating landlords as businesses within the fiscal regime. This is the only way to help ease the housing deficit."