PRS faces rental shortages as landlords exit

The private rented sector is grappling with a severe shortage of available properties, creating hurdles for tenants finding homes, a report reveals.

According to TwentyEA, there was a sharp decline in rental stock in the second quarter, down 19% compared to 2019.

The property market data firm says the situation has been made worse by landlords exiting the sector.

Also, with net migration reaching 431,000 in 2024, demand continues to outstrip supply, pushing the average asking rent to £1,814.

That’s a £47 increase from the first quarter of 2025.

Strong lettings transactions

Katy Billany, an executive director at TwentyEA, said: “Q2 2025 is characterised by strong transactional activity across sales and lettings.

“Whilst the sales market is experiencing rising supply, there are persistent structural challenges in both the sales and rental sectors.”

She adds: “While overall demand remains resilient, slower transaction timelines and rental affordability issues point to systemic issues that could dampen momentum if left unaddressed.”

Leta agreed on the rise

Despite the challenges facing the PRS, lets agreed this year have risen by 6.3% compared to 2024, marking the highest level in seven years.

The Property & Homemover Report reveals that online and hybrid letting agents have also seen remarkable growth, capturing 18.3% of new instructions to let, a 9.5% increase from last year and a 121% surge since pre-pandemic levels.

OpenRent dominates this segment, holding a 17.1% market share, with its growth accelerating by 11.5% annually and 189% since before the pandemic.

This expansion is most pronounced in the lower rent bracket of £800 per month or less, where online and hybrid agents now command a 25% share, reflecting a 17% year-on-year increase.

Sales market is thriving

The report also highlights that the home sales market is thriving, with nearly 500,000 properties listed in Q2, the highest supply level in seven years.

Demand has also climbed, up 7% year-on-year, while transactions have surged by 30% compared to 2024.

The average asking price for residential properties reached £458,000, a £24,000 rise from Q1.

However, recent stamp duty changes introduced in April have caused an 8.7% drop in exchanges compared to Q2 2024, with effects still rippling through the market.

Ms Billany said: “Recent Stamp Duty changes are still working their way through the system.

“This, in the short term, may lead to a cooling in buyer demand.”

Likelihood of homes selling

Geographically, Scotland led with a 77.7% likelihood of listed properties selling, while London lagged at 37.1%.

Properties in the North and Midlands sold more readily than those in the South.

Terraced and semi-detached houses had a higher probability of selling, at 61.4% and 60.3% respectively, compared to flats, which face various challenges including leasehold and cladding issues.

Three-bedroom homes were the most sought-after, with a 57.8% chance of selling, followed by two-bedroom properties at 53.4%, while studios trailed at 38.9%.

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