Rising tenant demand and property scarcity plague the UK’s PRS – report

Rising tenant demand and property scarcity plague the UK’s PRS – report

0:01 AM, 12th September 2023, About 10 months ago

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In response to growing media speculation over whether landlords are leaving the private rented sector (PRS) and if tenant demand is reaching an all-time high, one survey says it has definitive proof of what is happening.

The findings from RentTech firm Goodlord and Vouch show that a staggering 78% of letting agents have witnessed a surge in tenant inquiries searching for rental properties.

However, despite the demand, 58% of agents report an alarming scarcity of available rental properties.

The survey questioned more than 2,000 landlords, tenants and agents and also found that nearly all agents report having at least one landlord selling at least one of their rental properties.

‘Forces are giving landlords pause for thought’

Goodlord’s chief executive, William Reeve, said the PRS has seen growing pressures over the last 12 months and added: “We can see which forces are giving landlords pause for thought, where anxieties for tenants are coalescing, and how agents are preparing for change.

“The private rental sector is a vital part of our economy; we hope this report provides valuable insight to all of its stakeholders and encourages decision makers to take the steps which will boost confidence in the market, particularly for landlords.”

Tom Goodman, the managing director at Vouch, said: “Although it’s understandable to see rising concern from agents and landlords about the changes to come, it’s more important than ever to see the positive in this shifting landscape.

“Upcoming legislation is a real opportunity for letting agents to demonstrate their value to landlords and tenants, meaning clued-up letting agents will continue to thrive.”

Landlords exiting the UK’s rental market

The findings from the State of the Lettings Industry report also highlight that there is mounting evidence pointing to landlords exiting the UK’s rental market.

It found that 95% of letting agents reported that at least one of their landlords opted to sell one or more of their properties in the past year.

And nearly a quarter of these agents, or 24%, revealed that up to 20% of their landlords had divested properties from their portfolios.

While a mass exodus of landlords has not yet materialised, the industry is bracing for more departures in the coming year.

An alarming 80% of letting agents expressed their expectation that a greater number of landlords would exit the sector within the next 12 months.

Of these, 36% believed it would constitute a ‘significant amount’ of landlords.

Demand and the availability of homes to rent

The survey’s respondents say there are various issues for creating the imbalance between demand and the availability of homes to rent, including:

  • 76% of respondents pointed to landlords opting to sell their properties or reduce their rental portfolios
  • 59% attributed the scarcity to a lack of new landlords entering the rental sector
  • 51% cited more tenants choosing to remain in rented accommodation instead of pursuing homeownership.

The report also highlights that 76% of tenants who relocated between July 2022 and July 2023 found it a struggle searching for a home – and 13% had to pay a higher rent when they did so.

Potential impact of the forthcoming Renters (Reform) Bill

The survey also highlights that landlords are increasingly worried over the potential impact of the forthcoming Renters (Reform) Bill, along with new rules on meeting new Minimum Energy Efficiency Standards.

Meanwhile, tenants are increasingly anxious about fast-rising rents and landlords are worried too which is why they are increasingly using rent guarantors.

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