The competition for every property is so fierce that renting feels nearly impossible right now. When a flat in the area I’m searching for appears on Rightmove or Zoopla, someone else has already purchased it.
According to what I’ve read, more and more buy-to-let landlords are selling up, which means there are fewer rental properties available and higher rents as a result.
But I fail to see how this is rational. If landlords are downsizing, shouldn’t part of the demand for rental housing be reduced if either new landlords or first-time home buyers are buying these properties?
Where are all these properties going?
According to research by us, since 2016, almost a quarter of a million more houses have been sold by landlords than have been bought. This trend is mostly the result of investors selling up because of tax increases and expanding regulation.
According to the English Housing Survey, the number of properties available on the private rental market has decreased even more sharply.
It predicts a decrease in privately rented housing from 4.8 million to 4.3 million between 2018 and 2021.
There is currently a persistent disparity between the number of rental homes available and the amount of tenant demand.
The latest English Housing Survey estimates that roughly 500,000 homes may have been lost from the private rented market since 2018.
According to Zoopla, the total supply of rental homes is currently 37% below usual, while the demand from renters is currently 80% above normal.
The most recent market analysis from Propertymark, the UK’s top membership organization for letting agents, echoes this.
Propertymark claims that with an average of 11 potential renters currently applying for every vacant property, the supply of properties cannot keep up with the increased demand.
Rents have been growing very quickly in recent years due to the intense competition among tenants.
According to the most recent HomeLet Rental Index, average rent increased by 10.2% in just the last year.
How rents across the UK have changed over the past year
|Oct 2023||Oct 2022||Annual Variants|
|8||York’s & Humb||£794||£730||8.8%|
|9||East of England||£1,124||£1,037||8.4%|
Source – Ashmore residential research
Unsurprisingly, according to Zoopla’s data, renting affordability for a single earner is at its lowest point in over a decade.
As more landlords plan to sell this year, the problem appears to be getting worse.
According to a survey by the National Residential Landlords Association, one in three landlords intend to reduce the size of their portfolio this year, marking the greatest level of anticipated disinvestment in more than six years.
Just 9% of landlords, compared to 14% the year before, stated they intended to expand the size of their portfolio during the following 12 months.
Why is there a lack of rental homes?
The landscape for renters has changed dramatically and continues to change dramatically.
There are new laws and with them come new costs.
This is in addition to tax changes and interest rate increases.
For this reason, many owners have sold their properties but very few new investors have entered the market.
This leaves the market in a deficit that is actually felt the most by renters.
The English Housing Survey recorded a loss of 500,000 homes in the private rental market since 2018.
If all of these properties were single-occupancy, 500,000 renters would be displaced, but of course we know that many of these households are couples or families, so the numbers would be comfortably double.
Some landlord sales become short-term lets
It is worth saying that all not every property sold by landlords are sold to owner occupiers
In recent years, it has become increasingly more difficult to break even as a residential landlord, with properties being resold to short-term accommodation providers who offer holiday rentals.
or serviced apartments instead of long-term rental houses.
Likewise, many multi-unit buildings or lower-value homes located in high-demand areas have been sold for development.
Equally, many multi-dwelling properties, or lower value homes, in high demand areas have been sold for development.
This takes relatively affordable properties off the market in exchange for larger single-family homes or high-end homes.
Finally, while reasonable, the questions assume that first, there are enough first-time buyers who are able and willing to buy a property entering the market; and secondly, the property is of a type suitable for a first-time buyer.
In many markets, it is the oldest and largest stocks that prove nonviable.
This is less likely to attract owner-occupied buyers and also takes out of circulation a larger number of potential apartments located at the affordable end of the private rented sector.
In these circumstances, there has been no real increase in the number of properties suitable for first-time buyers, and at the same time, the number of homes available at the lower cost end of the rental market
Homeowner properties are more likely to be under-occupied
If all these properties were single-occupancy, 500,000 renters would be displaced, but of course we know that many of these households are couples or families, so the
The problem with properties leaving the private rented sector is not that they disappear completely from the property portfolio but that they leave a gap in the housing sector where most new households tends to form.
Additionally, private sector rental properties are more likely to be occupied by multiple households.
On the other hand, home owners are more likely to be single-family households, or even unoccupied homes.
This means there may be a net decrease in the number of available homes as supply moves from the private rental sector to the owner-occupier sector.
According to the most recent Housing Survey for England, more than half (53%) of private properties are classed as unoccupied, compared with 15% of private properties
If you’re a landlord who would like more information on how to enhance your rental property value, attract and retain quality tenants, and maintain legal compliance, our team at Ashmore Residential would love to hear from you. Please contact us at firstname.lastname@example.org or call us on 020 8366 9777 . We are waiting for your call.