Letting agents have highlighted a persistent high demand for rental properties, coupled with a significant decline in available supply. This imbalance is primarily attributed to the dwindling number of new landlords entering the market, exacerbated by existing tenants choosing to stay put to circumvent the hike in rental prices.
A recent survey conducted by the Royal Institution of Chartered Surveyors (RICS) among its members has unveiled a noticeable uptick in tenant demand throughout the three months leading to January. Despite this, there’s a sense of the market cooling off, possibly mitigating the ongoing reduction in new landlord listings.
The current state of the rental market spells trouble for tenants, who are likely to face increased rental costs in the near future due to the prevailing supply-demand mismatch. Tom Bill, Knight Frank’s head of UK residential research, forewarns of a challenging period ahead, particularly for landlords amidst an election year. He predicts, “low supply, high demand and more financial pain for tenants,” cautioning that legislative changes, such as the Renters Reform Bill, might further exacerbate this imbalance by dissuading landlords from entering the market. He stresses the importance for politicians to consider the potential adverse effects alongside the benefits of regulatory interventions.
Adding to the discourse, Robert Newton-Howes of Yorkshire Surveyors Limited, points out the continuous rise in rents and the shrinking housing supply as landlords exit the market. He cites “low margins, higher taxes, and tougher regulations” as key factors driving landlords away.
Allan Fuller, from the London-based Allan Fuller Estate Agents, echoes these concerns, noting the upward pressure on rents due to the scarcity of available rental stock. He calls for a comprehensive overhaul of the system to promote further investment in the private rental sector. Fuller emphasizes the need for stringent measures against “rogue landlords” who neglect their properties, while also protecting the interests of the majority of responsible landlords.
This multifaceted crisis in the rental market underscores the urgent need for balanced policy measures that can stimulate landlord participation while ensuring affordable housing options for tenants.