Pressure on the rental market continues to build this autumn despite a cooling market earlier in spring, with more landlords selling up and more tenants looking for short-term homes, according to fresh data.
More than three-quarters of agents have seen an increase in the number of tenants searching for properties, while more than half of agents have reported a decrease in the number of available properties, according to Goodlord and Vouch’s State of the Lettings Industry report.
The rental market has been under pressure since the end of 2021 when the Bank of England began to raise the interest rate to tackle inflation, which led to higher rents as landlords tried to protect their margins to afford mortgages.
Average UK private rents increased by 8.6 per cent in the 12 months to July 2024, while rents in London increased by 9.7 per cent to £2,114 per month, according to the ONS, although they did cool a little earlier this year.
High rents have put the housing ladder increasingly out of reach for many.
“For those already teetering on the edge financially… it’s a pressure cooker ready to explode,” Patricia McGirr, founder of Repossession Rescue Network, said earlier in the year. “Families are being squeezed from all sides”.
Goodlord and Vouch suggested that legislation aimed at protecting renter’s rights may be causing a supply squeeze in the sector. More than half of the landlords they surveyed said that “incoming legislation” had caused them to sell up and leave the market.
Just under a third of landlords surveyed said they had either sold one of their rental properties or put one on the market in the past year, and a further 17.4 per cent of landlords said they were considering reducing their portfolio in the coming year.
However, this may also just be a hangover from the cost-of-living crisis and the higher base interest rate – while mortgage rates are set to come down with the base interest rate, they still sit at around four per cent.
William Reeve, CEO of Goodlord, said: “This year’s report doesn’t give us a lot to be cheerful about. The whole sector is under intense pressure and the light at the end of the tunnel remains fairly dim.
Overall, the country needs more rental homes to alleviate the supply/demand imbalance – which in turn requires house building, streamlined regulations, and better landlord incentives.
While letting agents themselves will generally continue to be resilient – as they have so consistently demonstrated in recent years – neither landlords nor tenants have much to be optimistic about right now.”