Tenants will compete over fewer homes and likely pay ever-higher rents as a consequence thanks to the government’s attack on landlords, as more investors look to flee the buy-to-let market.
A fresh study has found that almost eight in ten landlords (79%) report that the demand for private rented housing was strong in the third quarter if the year.
The data, compiled by Pegasus Insight on behalf of the National Residential Landlords Association (NRLA), indicates that landlords who let property in the South East experience the highest levels of demand, with 84% saying it was strong in Q3 2024. By contrast, the figures reveal that demand for private rented accommodation is lowest in the West Midlands.
Despite this trend, across England and Wales 19% of landlords said they sold property over the previous 12 months – more than double the 8% who purchased properties over the corresponding period.
Over the next 12 months 41%of landlords said they plan to sell at least some rental properties, compared to just 6% saying they would buy.
The NRLA warns that, for the vast majority of tenants, landlords selling properties spells bad news. As it stands one in eight renters can purchase a home in the area in which they currently live, according to Oxford Economics.
This will be compounded by decisions made in the Budget which will further stifle supply in the rental market and increase stamp duty for many first-time buyers. Meanwhile, mortgage rates are expected to remain higher for longer than expected according to the Office for Budget Responsibility.
The lack of housing in the rental market will be felt hardest by those in receipt of housing benefits who face the prospect of their support for housing costs being frozen from next year.
Ben Beadle, chief executive of the NRLA, said: “Tenants the length and breadth of the country know that there are not enough homes to rent. Rather than seeking to tackle it, the government is instead doubling down on policies that have caused the chasm between supply and demand to widen in the first place.
“Whilst landlords selling up might benefit a minority of tenants in a position to afford a home of their own, the vast majority will face a growing struggle to access rental homes.
“It’s time for a change of course. We need policies to support the provision of more decent quality homes for private rent alongside all other tenures.”
Beadle’s views concur with the latest survey from the Royal Institution of Chartered Surveyors, which reported that the number of available rental properties for let was dwindling while demand from renters rose, owing in part to recent announcements in the Budget, including an increase on stamp duty on buy-to-lets and second homes, adding thousands of pounds to the cost of buy-to-let and second home purchases.
The chancellor Rachel Reeves claims this will free up some 130,000 homes – as more homes will now be bought by owner-occupiers, rather than landlords.
However, while that may be a good news for aspiring homeowners, it also means fewer homes in the private rental sector.
Across the UK, RICS members were reporting fewer landlords searching for new properties, but in the North West and Midlands this was particularly prevalent.
The majority of agents and surveyors expect rental prices to be pushed higher in the months and years ahead, due to the supply-demand imbalance in the market.
In every UK region, more RICS members said rents would rise over the coming three months than those who said rents would fall. This was most overwhelmingly the case in Wales, the Midlands and Yorkshire and the Humber.
