Next incumbent of No.10 needs to address the PRS supply crisis

Next incumbent of No.10 needs to address the PRS supply crisis

0:01 AM, 15th July 2022, About a month ago 5

Text Size

The next Prime Minister must address the supply crisis in the private rented sector if homeownership ambitions are to become a reality. That is the warning from the NRLA as new survey data shows that the supply of homes to rent is likely to keep falling over the next year.

According to this research, by BVA-BDRC, 23% of landlords said they plan to cut the number of properties they let in the next 12 months. This is up from 20% a year ago.

In contrast, just 14% say they plan to increase the number of properties they let, unchanged since the same point last year and down four points since Q1 2022.

Against this picture of falling supply, 60% of landlords in England and Wales reported increased demand for rental housing in the second quarter of the year. This represents a large increase from the 39% of landlords who reported increased demand a year ago.

With the demand for rental housing outstripping supply, official data has found that private rents across the UK rose by 2.8% in the year to May this year, the largest annual growth since January 2016.

This latest survey supports recent evidence of the fall in supply from other organisations including the District Councils Network. 76% of the surveyed councils have warned that a rise in landlords leaving the sector or converting properties to holiday lets has led to longer waits for council housing.

The NRLA is warning that the trend is a direct result of government policy and punitive tax increases since 2015, which have shrunk the private rented sector.

Since the Government began to restrict mortgage interest relief for landlords, the number of private rented homes in England has fallen by over a quarter of a million. In stark contrast, those providing holiday lets continue to enjoy full mortgage interest relief creating a distortion in favour of short-term housing over longer-term rentals.

The NRLA is calling on the next Prime Minister to end this hostility toward landlords and take steps to encourage investment to meet the rising demand.

Research by Capital Economics suggests that just removing the stamp duty levy on additional properties would see almost 900,000 new private rented homes made available across the UK over the next ten years. This would lead to a £10 billion boost to government revenue through increased tax receipts.

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

“The last six years prove that it was a nonsense to think that cutting the supply of rental housing when demand is so strong would make it easier for those saving for a home of their own.

“Driving rents up just leaves tenants with less cash to save for a deposit.

“We need a strong and vibrant private rental market that meets the needs of those who rely on the flexibility it provides, those who need somewhere to live before becoming homeowners and those for whom the promise of social housing tomorrow provides cold comfort today.

“The next administration needs to reset its plans for the sector.”



Comments

Freda Blogs

10:24 AM, 15th July 2022, About a month ago

I believe Penny Mordaunt is supportive of HMO owners fighting Council Tax being levied on all rooms individually - which would decimate the sector and hence remove many rooms to rent across the country . Perhaps she will be more supportive to landlords generally?

Luke P

11:53 AM, 15th July 2022, About a month ago

Reply to the comment left by Freda Blogs at 15/07/2022 - 10:24
Being a full-fat Globslist, I doubt she’ll be anything like our friend.

Emma Hayes, MD - Platinum Property Partners View Profile

13:47 PM, 15th July 2022, About a month ago

Absolutely agree on the urgent need for sensible government legislation aimed at supporting the PRS rather than penalising it. The UK is facing a housing crisis and keeping a good quality mix of housing available is vital if we’re to see the situation improve for tenants.

We know from our network’s experience that co-living is a very viable option for people as they save for a deposit on their own property, and government support to ensure that the HMO sector is well regulated would be very welcome, rather than the current demonisation of landlords in the media which is simply not constructive.

Ian Narbeth View Profile

16:46 PM, 15th July 2022, About a month ago

Yesterday's (14th July) Evening Standard had an article by one of their journalists and a leader lamenting the increase in rents in London of 15% over the past 12 months.
Neither the commentator nor the leader writer mentioned the likely reason: that the supply is diminished because landlords have withdrawn their properties.
Post-Brexit, it is likely (though I confess I have not seen the data) that there are fewer workers seeking accommodation in London and yet rents have risen dramatically. This suggests a shortage of housing to rent. A sensible policy would be to encourage building and renting. And yet, and yet the Government continues to signal to the PRS that life is going to get tougher and threatens heavy fines (£30,000 coming right up if you cannot get the EPC rating to C) and more regulation.

Robert View Profile

14:28 PM, 16th July 2022, About a month ago

You are absolutely correct Ian that rents in the real world have risen by more than 15% in London, including outer London over the last year. Landlords have been selling up in their droves due to government anti-landlord policy.
Frankly, we are all scared of the Renters Reform Bill on top of all the other legislation that has come in. Rental supply is now so short in London that agents have 20 serious tenants registered and looking for every one rental property that comes to the market. I have also heard anecdotally of 40 tenants trying to view one rental property in cheaper parts of London.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Tax Planning Book Now