Landlords offering properties falls to five-year low amid legislative pressure

The number of landlords offering properties for rent falls to its lowest level in five years, claims the Royal Institution of Chartered Surveyors (RICS).

Its UK Residential Survey for July reveals whilst tenant demand remains steady, the lack of supply continues to fall and rent prices will continue to rise in the coming months.

Respondents say landlords with smaller portfolios are reducing their stock or selling up completely due to legislative changes.

Landlords are spooked by the Renters’ Rights Bill

According to the RICS survey, tenant demand held steady in the three months to July, recording a net balance of +4% (easing from +14% in the previous quarter).

However, a firmly negative trend in landlord instructions, the act of a landlord making their property available for rent, continues, with the latest net balance of -31% the weakest since April 2020.

RICS warns that with the lack of supply, rent prices will continue to increase, with 25% anticipating rent rises over the next three months.

Respondents warned that landlords are feeling pressure from recent legislative changes, with one RICS agent saying: “Landlords are definitely spooked by the Renter’s Rights Bill. We’ve seen a big upturn in Section 21 notices being served, which was inevitable. It’s unbelievable that the Housing Minister didn’t anticipate this happening!”

Others warn supply will continue to dwindle as landlords exit the market.

House prices remain under pressure

In the sales market, house prices are reportedly falling at a sharper rate than the national average (in net balance terms) across East Anglia.

UK-wide, house prices remain under pressure, with a net balance of -13%.

However, bucking the broader trend, prices continue to rise in Northern Ireland and Scotland, while respondents in the North West of England are also seeing increases.

Looking ahead to the coming months, respondents expect prices to face a modest degree of downward pressure at the national level. However, over the next 12 months, a net balance of +19% anticipate an increase in house prices.

New buyer enquiries recorded a net balance of -6% in July, down from +4% in June.

On the supply side, a net balance of +9% of respondents reported an increase in new listings coming onto the market; however, this figure points to only marginal growth.

Chancellor’s Autumn Budget raises concerns

RICS chief economist, Simon Rubinsohn, says the latest survey shows the housing market remains sensitive ahead of the Autumn Budget.

He said: “The somewhat flatter tone to the feedback to the July RICS Residential Survey highlights ongoing challenges facing the housing market. Although interest rates were lowered at the latest Bank of England meeting, the split vote has raised doubts about both the timing and extent of further reductions.

“Meanwhile, uncertainty about the potential contents of the Chancellor’s autumn budget is also raising some concerns. Against this backdrop, respondents continue to report that the market remains particularly price sensitive at the present time.”