Rents rise as landlords exit the market, survey shows

The UK’s private rented sector is facing a supply-demand imbalance that is pushing up rents as landlords exit the market, a survey reveals.

The findings from e.surv, which collected data from more than 500 valuers and surveyors, found that rental demand is outstripping supply in most regions – especially in London and the South East.

As a result, properties are being let more quickly and often at or above the asking price.

The residential valuation and surveying service also reveals that 45% of London-based surveyors reported an increase in homes being let above the asking price.

And 40% say the time to let a property has shortened – just 15% of surveyors in the North East and 10% in Wales observed similar trends.

‘Number of private landlords exiting the market’

Rob Owens, the head of research at e.surv, said: “While the number of private landlords exiting the market has not been at the scale some first feared, our analysis shows that there is likely to be continued pressure on

rented supply and prices as landlords continue to consider their position.

“The challenges facing buy to let landlords could have several implications for the UK housing market if left unaddressed, including a reduction in the supply of rental properties and an increase in rent for tenants already facing a cost of living crisis.”

He added: “Whilst the cost of mortgages has dampened price growth and the pace of home sales across most markets this year, we anticipate that interest rates are nearing their peak and will likely begin their descent to more affordable levels over the course of 2024.

“Our survey also shows that properties typically at the lower end of their local sales market still achieve their asking prices and sell in good time.”

Landlords are facing increasing pressures from rising costs

The survey also reveals that landlords are facing increasing pressures from rising costs, regulatory changes and tax reforms.

Half of the survey’s respondents saw an increase in privately rented homes entering the sales market, with 90% of them being sold to owner-occupiers rather than investors.

These shifts come despite the Government recently scrapping plans for new minimum energy standards for rented homes, which would have required landlords to upgrade their properties to have an energy performance certificate of at least C.

In addition, half of the surveyors saw a rise in landlords planning to sell off parts of their portfolio or exit entirely over the last 12 months.

Mortgage costs remain the primary concern for landlords, with 79% of surveyors noting a decline in landlords planning to buy new investment properties.

The survey also found that homes were taking longer to sell and asking prices at the top of the market were under pressure.

Additionally, new build incentives were increasingly focusing on aiding buyers with costs like deposit contributions, legal fees and stamp duty payments.

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