WIREDGOV

Tenants will continue to struggle to find the housing they need, as new data reveals the chronic shortage of homes to rent to meet demand.

Almost eight in ten landlords (79 per cent) report that the demand for private rented housing was strong in the third quarter if the year, according to research from Pegasus Insight.

The data, compiled for the National Residential Landlords Association, indicates that landlords who let property in the South East experience the highest levels of demand, with 84 per cent saying it was strong in Q3 2024. By contrast, the figures reveal that demand for private rented accommodation is lowest in the West Midlands. 

Despite this trend, across England and Wales 19 per cent of landlords said they sold property over the previous 12 months - more than double the eight per cent who purchased properties over the same period.

Over the next 12 months 41 per cent of landlords said they plan to sell at least some rental properties, compared to just six per cent saying they would buy.

The NRLA warns that, for the vast majority of tenants, landlords selling properties spells bad news. As it stands one in eight renters can purchase a home in the area in which they currently live, according to Oxford Economics.

This will be compounded by decisions made in the Budget which will further stifle supply in the rental market and increase stamp duty for many first-time buyers. Meanwhile, mortgage rates are expected to remain higher for longer than expected according to the Office for Budget Responsibility. 

The lack of housing in the rental market will be felt hardest by those in receipt of housing benefits who face the prospect of their support for housing costs being frozen from next year.

Ben Beadle, Chief Executive of the National Residential Landlords Association, said:

“Tenants the length and breadth of the country know that there are not enough homes to rent. Rather than seeking to tackle it, the Government is instead doubling down on policies that have caused the chasm between supply and demand to widen in the first place. 

“Whilst landlords selling up might benefit a minority of tenants in a position to afford a home of their own, the vast majority will face a growing struggle to access rental homes.

“It’s time for a change of course. We need policies to support the provision of more decent quality homes for private rent alongside all other tenures.”

Notes:

• Pegasus Insight undertook 720 online interviews with current members of the National Residential Landlords Association between 17th September and 6th October 2024.
•  Data published earlier this year by Oxford Economics suggests that just one in eight renters can afford to buy in the area in which they live. See https://www.bbc.co.uk/news/articles/c7209lk8x2wo. 
• Commenting on the decision in the budget to increase from 3% to 5% the stamp duty levy paid on the purchase of homes to rent out, Paul Johnson, Director of the Institute for Fiscal Studies noted that: “That the chancellor decided to increase stamp duty, if only on second properties, is most disappointing of all. It again reduces transactions, increases again the bias in favour of owner occupation, and against renting, and at least part of the consequence will be to reduce the supply of rental housing and so increase rents.” See https://ifs.org.uk/collections/autumn-budget-2024
• The Office for Budget Responsibility has forecast that average mortgage rates are set to rise from around 3.7% this year to a peak of 4.5% in 2027, then stay there until the end of 2029. See https://obr.uk/docs/dlm_uploads/OBR_Economic_and_fiscal_outlook_Oct_2024.pdf. 
• According to an analysis by Nationwide, 1 in 5 first time buyers will be negatively affected by the decision to reduce the threshold at which homeowners will need to start paying stamp duty. See https://www.nationwidehousepriceindex.co.uk/reports/annual-house-price-growth-slows-in-october. 
• Further information about the NRLA can be found at www.nrla.org.uk.  It posts on X @NRLAssociation.
• The NRLA’s press office can be contacted by emailing press@nrla.org.uk or by calling 0300 131 6363.