According to new figures, a depletion of private rental property forces rents to record levels and adds to the cost of living crisis.
According to Hamptons, rents across Britain increased by 6.7 percent year-on-year in February 2022, while rents in the North soared by 9.6 percent. As the cost of living crisis bites, Hamptons assesses that the average tenanted household will spend 54 percent of their post-tax earnings on rent and bills this year.
This equates to an additional £1,008 each year, with the total amount they spend on yearly rent and bills set to rise to £17,914. While those in Southern regions are witnessing some respite with rental increases cooling, it is picking up pace in the Midlands and North due to a supply and demand problem.
A report from lettings portal Citylets shows that for the final quarter of 2021, the moderate monthly rent across the country increased by 5.2% to £869.
The dearth of available properties means they are being taken up at record paces, with 40% of properties let in one week and 83% taking short than a month to let.
Some considerations about rising property prices and new regulations expected in the private rental sector will persuade many landlords to sell, further decreasing the available stock of rental properties.
Fitting supply with demand has always been a stable see-saw challenge for letting agents. Yet the present imbalance is among the most exhaustive that has been seen in a long time. This situation has long been anticipated and is the culmination, and unavoidable outcome, of several Government interventions over several years.
Landlords have been battered by increases in income tax and higher stamp duty rates, integrated with a raft of recent compliance and legislative efforts. The extra costs that the remaining landlords have faced have translated into rising rents for tenants. In many areas, when there is a spike in consumer demand for a product, you can quickly react by simply stepping up the production line to meet it. Yet this is no short-term fix as the solution is far more deep-rooted and long-term. It’s a challenge not different from that now facing the motor industry, where the deficit of new cars has witnessed rising prices in the second-hand car market.
According to experts there is little hope on the horizon. They say it is inevitable that the gap between spiralling rental demand and dwindling supply will increase further without urgent action at the highest level to incentivise additional supply. Experts believe that increasing the supply needed now will only happen with new incentives to encourage more landlords to invest in buy-to-let. They would like to see the Government halt the run of increased tax burdens that have dampened the investment desire of many private landlords, who many believe hold the key to unlocking more supply. Another way of interpreting the situation is that the reduced private rental sector stock is encouraging the more professionalised Build to Rent to fill part of the resultant vacuum.