Landlord group challenges simplistic view of rent pricing

A landlord group says a new report on the PRS shows “a 2D version of rent pricing” rather than the reality.

Rodney Townson, from landlord organisation iHowz, tells Property118 that SpareRoom’s report on the UK rental market makes interesting observations but fails to capture the full picture, and instead focuses on a “too narrow view of supply and demand”.

According to the report, the rental market never corrected after the chaos of 2021–22, when demand outweighed supply by a ratio of 9:1 at one point, leading to continued rent increases.

Rent prices continue to rise

SpareRoom points out that in the lockdown in 2020, rents fell as tenants stayed put and landlords saw a surplus of vacant rooms which led to them being more flexible.

The report adds that post-pandemic, as places began to open up, there was a huge surge in tenants looking for rooms as pent-up demand re-entered the market, which then pushed rents higher.

However, the report says that while the market is showing signs of stabilisation and demand is cooling, rents are continuing to rise.

Supply and demand

The report says: “London rents, while slightly lower than their late-2023 peak, still remain close to £1,000 per month on average.

“Zoom out and view the rental market over years, not months, and you’ll see that it is still trending upwards. Falling doesn’t mean affordable, and what we never see are sustained decreases taking rents down to levels deemed affordable — i.e. below 30% of income.

“Wage increases have never kept pace with rent rises or the spiralling cost of living, so the affordability gap gets ever wider. Renters spending more than half their take-home pay on rent has increased from 24% in 2021 to 26% in 2025, and three quarters now spend more than 30%.

“In that time, UK average room rents have increased by 29%, from £576 per month in Q1 2021 to £744 per month in Q1 2025.”

The flat-share website says this is down to supply and demand but admits that fears around a landlord exodus due to the Renters’ Rights Bill are growing,  which could reduce supply further.

Standards required of landlords

However, Mr Townson tells Property118 it’s important to remember that it’s not just renters who have faced pressures with landlords also facing rising costs due to more regulations.

He said: “Most of these assumptions on rent are based simply on supply and demand and assume that the market has remained elastic with no significant changes over the last 15 years.

“The focus on simple supply and demand was so narrow, resulting in a rather 2D view of rent pricing.

“The quality of renters may not have changed (excluding Right to Rent), but the standards required of landlords and their properties certainly have, such as deposit protection rules, EPCs, electrical safety, and the Tenant Fees Act.

“Several new requirements, with associated costs, are included in the Renters’ Rights Bill, with significant penalties introduced for not meeting these standards, including blocking the eviction process, rent repayment orders, and local authority fines using PCNs.”

Combination of uncertainties

Mr Townson adds that costs continue to rise for landlords, and a combination of uncertainties is pushing them to leave the market.

He said: “From 2008, the lending environment became tougher for landlords, as did taxation, particularly with Section 24, and the growth of local authority licensing.

“Uncertainty about the Renters’ Rights Bill, minimum energy-efficiency standards, and the rise of licensing schemes has accelerated the sale of rental properties by BTL landlords, as they bring forward retirement plans and seek better risk-adjusted returns, hardly surprising when a cash ISA outstrips renting to tenants without the effort or risks.

“The core disagreement is whether rising rents are a simple matter of supply and demand (SpareRoom) or a more complex issue driven by a combination of market forces and the financial and regulatory pressures on landlords.”