0:01 AM, 13th September 2024, About 8 hours ago
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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.”
