0:01 AM, 13th September 2024, About 3 months ago 1
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The UK’s private rented sector (PRS) continues to be plagued by a chronic shortage of available properties, driving rents to new heights, Zoopla reports.
Its rental market analysis reveals that the number of homes for rent remains 24% below pre-pandemic levels, while demand remains robust.
Despite a slight decline in rental demand compared to the peak of the pandemic, there are still 21 people competing for every rental property, more than double pre-pandemic levels.
This intense competition has pushed rents up by 5.4% year-on-year, outpacing the growth in average earnings.
The platform’s executive director, Richard Donnell, said: “The slowdown in rental inflation is being drawn out by a lack of homes for rent and continued strong demand, driven by the unaffordability of home ownership.
“Rental inflation is slowing in some major cities where rents are high, but they are still increasing quickly in more affordable areas.”
He adds: “Any new policy or tax changes that result in a reduction in supply will simply push rents higher hitting low incomes renters hardest.
“It is essential policymakers focus on growing the stock of homes for rent as the primary route to slowing rental inflation and improving choice for renters.
“As things stand the growing unaffordability of renting is the only route to slower increases in rents.”
The government’s proposed rental reforms and speculation about potential tax changes in the Autumn Budget have added to the uncertainty facing landlords, Zoopla says.
Many landlords are considering selling their properties, further reducing the supply of rental homes and driving up rents.
While rental growth in major cities like London has slowed, rents in more affordable areas close to these cities have seen significant increases.
Places like Kilmarnock, Kirkcaldy, Wolverhampton, Oldham, Darlington and Walsall have experienced double-digit rent growth in the past year.
Zoopla predicts that the supply-demand imbalance in the PRS will persist into 2025, with unaffordable homeownership continuing to drive demand for rental housing.
Unless there is a significant increase in the supply of rental properties, renters can expect to face ongoing challenges in finding affordable housing.
Adam Jennings, the head of lettings at Chestertons, said: “London’s rental market is notoriously competitive, and we register numerous tenant enquiries per listing.
“With some landlords deciding to sell up amid tax changes and the Renters’ Rights Bill, the number of available rental properties is likely to see a slight decrease over the coming months. “Although this dip will unlikely be permanent, it will result in an even more concentrated level of tenant demand per available property that will trigger rents to go up further.”
Propertymark chief executive, Nathan Emerson, said: “The rental market has been suffering from a lack of supply against an ever-growing demand for a concerningly long period of time.
“The housing sector continues to see issues escalate year on year and the real-world effects is that renters face an increasing challenge to secure a suitable property for their needs.
“With tax changes and additional liabilities being imposed on many landlords, plus increases to the general cost of living and mortgage repayments this places extreme pressure on operational costs.”
Director of Benham and Reeves, Marc von Grundherr, said: “There remains an incredibly high demand for good rental accommodation, and we simply don’t have the supply reaching the market to satisfy this demand.
“As a result, properties are being let at an extremely quick pace and this supply and demand imbalance is driving rental values ever higher.
“Unfortunately, this is a problem that looks set to persist, with the government introducing the Righters’ Rights Bill this week, with tax changes also expected in the Autumn Statement, both of which are likely to deter landlord investment.”
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Sign Up12:41 PM, 13th September 2024, About 3 months ago
I still see a lot of anti-landlord rhetoric out there and I don't yet see the realisation dawning amongst labour politicians that they don't have the money to attack "...the landlords".
If you walk into government saying you are going to fix the housing crisis then immediately start giving well above inflation pay increases to the likes of ASLEF members you are only making the economic situation worse and you have less money to pursue 1970's-style anti-capitalist socialist dogma. The reality is that if labour wants to fix the housing crisis they can only do it with investment and investors, including small investors.
Sometimes governments need a sanity check and need to realise that being driven by anti-business, anti-capital, anti-landlord dogma actually damages the lives of ordinary people.
This is reality: Most landlords own a small portfolio, usually only 1-2 properties. As a landlord you might well only own 20%-40% of your property. The bank owns the other 60-80%. The bank takes no risk and this is because governments do not want another Lehmann brothers/Northern Rock crisis where they are obliged to bail out a bank, or buy it.
So as a landlord you might own 20%-40% of your property and you've probably invested to supplement your retirement income, pay for your kids' education or maybe even provide an income for yourself today. There's nothing wrong with that, it's better than selling vapes to kids. Most landlords only own 1-2 properties and they come from many walks of life, including both labour and conservative politicians and workers in the public sector.
If you're a good landlord investing your 20%-40% capital in providing safe, decent accommodation then you are doing something that is socially useful on a number of levels. But you are taking all the risk and in many cases you may also be doing a lot of work for a return that might be better after tax were you to invest in tobacco, fossil fuels or armaments.
So when you are investing your 20% to 40% and taking all the risk, with the bank taking none, and the government says you can't offset your finance payments against your income (unless you are incorporated) then you've got to put rents up a lot, pull your capital out your investment, or make your investment property unavailable to rent.
If the Bank of England raises interest rates this has a disproportionate effect on small landlords who may only own 20%-40% of their properties and are taking all the risk....because the banks take no risk, and that's what governments wanted.
If the labour government says that you can't get your property back if you have a bad tenant, or the tenant doesn't pay then you may lose all your money in the short to medium term, and in the longer term the banks won't lend to you anyway if they can't see that your rents will cover their interest payments.
If Ed Miliband says you have to upgrade your EPC from band D to band C (even thought the EPC system is still not fit for purpose) then you have to put rents up. If the government says that you are going to be prevented from putting rents up later, then you have to put rents up now. If the government says that they are changing the system such that you might have to spend 1-2 years going through the courts to get your property back then you have to put your rent up a lot now, or you might have to make the decision that it's just not worth the risk of letting it. This is because you only own 20-40% of your property and you are taking all the risk and doing all the work. The bank takes no risk and all that councils do is to try and dump their risk and their obligations onto you, even though you were doing something socially useful in the first place.
When socialist governments come into power one of the risks they face is the flight of capital i.e. if they attack non-doms because they think the electorate will like their hang-the-rich rhetoric and the non-doms move to Italy, Monaco, Switzerland or somewhere else then the tax-take goes down. If they attack wealth then the big investment moves offshore.
But if governments driven by left-wing socialist dogma attack their favourite bete noir like "...the landlords" then they can also cause the flight of capital from a much more local level because they are dysproportionately attacking small investors, not fat-cat bankers.
If labour governments attack "the landlords" then they are disproportionately attacking small businesses, pensioners and working people. What they will be left with is larger, incorporated landlords who know how to avoid all but the wealthiest tenants and have the know how to evict the smaller, problem tenants.
If the renters reform bill doesn't encourage good landlords, including small ones, to continue investing then when labour attack "..the landlords" they will also be attacking "the tenants". The end result of anti-good-landlord policies is lack of supply, high rents, a crisis for local councils trying to house homeless people, an increase in the benefits bill, and difficulties for people trying to move for work thereby creating a drag on economic growth.
At this stage I can't yet see anything in labours' renters reform bill that reduces the risk for good landlords and wouldn't be likely to exacerbate supply or cause rent inflation. If anybody can see any light out there, feel free to enlighten me.