PRS crisis looms as Renters’ Rights Bill deters landlords

The UK’s private rented sector (PRS) is set to face further strain in 2024 as the Renters’ Rights Bill deters more landlords from the sector.

According to research by tlyfe, the number of tenants competing for each rental property is expected to increase as the supply-demand imbalance continues to worsen.

The tenant app launched by OpenBrix analysed the level of private rental stock in England, the estimated number of private tenants, and the ratio between the two.

Its research reveals that the market was most overstretched in 2017, with an average of 2.36 tenants per rental property.

While this ratio improved slightly in the years leading up to the pandemic, it has been steadily increasing since then – and the Bill looks set to make this worse, the firm warns.

Available stock hasn’t kept pace

The chief executive of OpenBrix, Adam Piggot, said: “The rental market is incredibly fast paced, and this is due to the fact that tenant demand has grown substantially whilst the level of available stock simply hasn’t kept pace.

“In fact, the number of renters reliant on the private rental sector has increased by 132% over the last 30 years and although the ratio of tenants to available properties has improved, there are still more than two tenants for every privately rented property available.

“As a result, tenants are struggling to secure a property, with many rental homes being snapped up before they’ve even reached the market.”

He added: “At the same time, a lack of supply means that the cost of renting is climbing ever higher and, rather than address the issue by encouraging landlords to invest, it seems as though the government is intent on exacerbating the issue by deterring them from the sector.

“Whilst positive in its intentions, the Renters’ Rights Bill looks set to further widen the gap between the supply of rental homes and the level of tenant demand seen across the market, the result of which will be further rent increases and an even tougher task in securing a property for those who can afford it.”

Fewer rental properties and higher rents

The PRS The rental market, which experienced a brief respite during the pandemic, is now facing renewed strain due to high tenant demand and limited rental stock.

In 2023, the ratio of private tenants to rental properties reached 2.2, and tlyfe predicts a further increase to 2.21 in 2024.

Despite a slight drop in the number of private tenants, the available rental stock is expected to shrink even more significantly.

Government legislation aimed at deterring landlords has contributed to the reduction in rental stock, the firm says.

And the Renters’ Rights Bill, which has now had its second reading, is likely to further deter landlords, resulting in fewer rental properties and higher rents for tenants.

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