The Office for National Statistics (ONS) has reported that annual private rental prices witnessed a significant rise, with England seeing an increase of 5.4%, Wales at 6.5%, and Scotland at 6.0%.
Over the past year, rents surged by 5.5%, a slight rise from the previous 5.3%, casting a shadow over the stability of the private rental market.
Delving into the specifics within England, London witnessed the steepest annual percentage surge in private rental prices in the 12 months leading up to August 2023, recording a 5.9% hike. Conversely, the North East and South West regions experienced the lowest increases, both at 4.8%.
Kundan Bhaduri, an influential property developer and portfolio landlord at The Kushman Group, expressed his deep concerns, suggesting the UK could be on the verge of “losing the heart and soul of the private rental market.” He elaborated, “This isn’t just a struggle against the odds – it’s a fight to preserve the very system that has served the public over the past 25-30 years.”
Bhaduri passionately described the essence of the landlord-tenant relationship, emphasizing, “The bonds built between landlords and tenants, the trust formed over years of mutual respect, and the symbiotic relationship that lies at the heart of the rental market, are now at risk.”
He continued to drive home the significance of the role landlords play, stating, “Landlords aren’t mere property owners, they are the custodians of dreams, creators of homes and the pillars of a functioning society that has relied on private money to house the millions.”
Highlighting the challenges faced by landlords, Bhaduri mentioned, “The burden of red tape and rising interest rates is a threat not just to landlords but to tenants and the housing market as a whole. Policymakers and the government need to take note.”
Chris Druce, Senior Research Analyst at Knight Frank, echoed these sentiments, pointing out the lack of relief for tenants as rents continue their upward trajectory. He commented, “With demand comfortably outstripping supply in a sector that is seeing smaller landlords leave the space due to political and cost pressures, we expect this particular story to unfortunately run for some time to come.”
Jeremy Leaf, a north London estate agent and former RICS Residential Chairman, also provided his perspective: “These more timely rental figures reflect what we’ve been seeing on the ground – that shortage of stock is continuing the upwards pressure on rents at a time when students are adding to tenant numbers.”
Leaf shed light on the factors pushing landlords out of the sector, stating, “Higher mortgage rates as well as tax and regulatory issues are persuading landlords to quit the sector which is not helping keep rents in affordable territory.”
However, Leaf also highlighted a noteworthy trend, observing, “We have noticed the difference between the rents charged on new tenancies and those who are renewing existing arrangements as tenants are reaching an affordability ceiling.”
Concluding his insights, Leaf emphasised, “Landlords recognise the importance of reliable, long-term tenants rather than maximising their returns unless, of course, their costs are getting out of hand.”