The government has repudiated claims by one of its own MPs and a leading expert that the PRS is under pressure from reforms and rising levels of immigration.
Home Office data shows that net immigration hit a record high of 606,000 last year. Based on the average household size of 2.37 people, this means net demand for housing jumped by about 256,000, according to Capital Economics.
A report in The Telegraph reveals that at least 80% of people arriving in the UK first move into the PRS.
Imogen Pattison, assistant economist at Capital Economics, says that based on this estimate, the number of households in need of rental properties will have risen in the year to March by 4%. She says this would trigger a four percentage point drop in vacancy rates.
Vacancy
Analysis from the US shows that a 1% drop in vacancy rates corresponds roughly to a 1% increase in rents. According to Pattison, this could mean that net immigration in the UK could have increased rents by up to 8%.
Conservative MP Marco Longhi (pictured) has urged the government to reconsider its reforms and says: “At a time when we are seeing such a huge influx of people coming in from overseas, what we should be doing is increasing supply.
“It seems incredible that what appears to be happening instead is we are going to be reducing supply through the Renters Reform Bill.”
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According to estate agent Zoopla, landlord properties accounted for 11% of sales in the last month, as high mortgage rates and energy bills forced many property owners to ‘put their homes on the market’.
Graham Wood (pictured), Managing Director at Home Sales & Lettings at The Guild of Property Professionals, who has been involved in lettings as a landlord for 20 years and the owner of a letting agency for more than 15 years, says: “The outcome of the long-anticipated Renters Reform Bill is to have sufficiently frightened numerous landlords into selling their rental properties.
“Landlords feel that one way or another they have been under constant attack for the past five years. Previously, borrowing through a buy-to-let mortgage had income tax advantages for landlords.
“However, from 6th April 2017 phased changes have resulted in finance costs no longer being deductible against income on long term let residential properties. Additionally, there has been the threat and now the reality of the abolition of Section 21.”
Evidence
But a DLUHC spokesperson says: “There is no evidence to support claims our reforms will hinder rental supply and lead landlords to leave the sector.
“Our reforms mean 11 million tenants across England will benefit from safer, fairer, and higher quality homes, while ensuring landlords can swiftly evict problem tenants.”
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