Getting rid of the mortgage interest tax relief reduction on private rented sector landlords will undoubtedly reduce numbers of landlords selling up which will ease housing supply issues facing tenants today, according to a study carried out by a research consultancy.

Since 2021.the mortgage interest tax relief was drastically cut down to the basic rate of income tax.

The consultancy’s modelling on behalf of an industry body implies that by bringing back Mortgage Interest Relief (MIR) to its previous level prior to 2021 for the PRS, would almost certainly help reduce the increasing demand for properties outstripping the supply of housing availability.

The analysis claims that if the Bank of England’s base interest rate was to reach 5.0 per cent and stays above 2.5 per cent until the end of 2027, there is a major consensus of opinion that as much 735,000 properties -13 per cent -  could disappear from the sector when compared to 2021.

If this was to happen the Treasury would lose around £1bn of Corporation and Income Tax revenue per year.

However if it re-instates the MIR level prior to the 2019 reduction the consultancy believes that 110,000 fewer properties could ‘vanish’ from the private rented sector; then HMRC would be better off with £400 million per year in Corporation and Income Tax contributions.

Both the Bank of England and the cross party Housing Select Committee, along with other bodies, have been constantly warned about the  private rental housing crisis.

The consultancy claims by getting rid of the mortgage interest tax relief reform should also reduce the number of rental increases and relieve some of the landlords’ financial pressures when considering spending on maintence and improvements to properties.

The industry body is telling the government to commission a full review of how the recent tax relief reduction has affected the PRS. It should properly analyse the impact of the MIR changes on the numbers of private rented homes and rental price increases.

A spokesperson for the industry body, says: "In 2015 the government said it wanted to ‘create a more level playing field between those buying a home to let and those buying a home to live in’. In doing so it hiked costs for responsible landlords and totally ignored the burden it would create for renters.

“In the midst of an unprecedented cost-of-living crisis, the government needs to put economic reality before political pride and reverse this travesty of a reform.

“Tax hikes on landlords, exacerbated by rising interest rates, have deepened the supply crisis. And as this research demonstrates the situation is unlikely to improve until and unless it is reversed.