Research by the Residential Landlords Association has found the country faces a net loss of 133,000 homes for private rent over the next year.
This follows government figures showing that between March 2016 and March 2017 England saw a loss of 46,000 private rented homes.
The RLA’s figures, based on questioning over 2,600 landlords, show that 84% of landlords have seen tenant demand increasing or remaining stable.
Much of the reason for the fall in supply has been the decision to restrict mortgage interest relief to the basic rate of income tax and the decision to add a 3% levy on stamp duty for the purchase of additional homes.
Whilst the government has been working to boost the supply of homes to rent by corporate developers, analysis by the RLA suggests that just 2% of all private rented households in the UK are in homes developed by corporate investors.
The majority of landlords are individuals and small businesses, best positioned to support small and medium sized construction firms, the RLA said.
The trade body is now calling for the government to end the 3% stamp duty levy on landlords investing in property.
The RLA policy director, David Smith, said: “The demand for private rental homes shows no signs of slowing up, despite efforts to encourage home ownership. The government was always mistaken to place homes to own and to rent in opposition to each other rather than seeking to supply more homes in all tenures.
“Corporate investors are failing to provide the new homes to rent at the pace and scale we need. They are also poorly equipped to meet the housing needs of towns and rural areas.
“The vast majority of landlords are individuals and small businesses, providing good housing to their tenants and supporting local economies. We need to support and encourage them to provide the long term homes to rent needed. The government should use taxation more positively and not penalise landlords who are contributing to badly needed homes to rent.”