Government policy has left the private rented sector (PRS) ‘in tatters’ as figures show the number of homes to rent falling, but tenant demand continues to rise.

The criticism comes from the National Residential Landlords Association (NRLA) which says that since 2015, the government has embarked on a deliberate effort to discourage investment in private rented housing.

This has included measures to restrict mortgage interest relief and imposing a 3% stamp duty levy on the purchase of homes to rent out.

However, earlier this year, the Levelling Up, Housing and Communities Secretary, Michael Gove, argued that shrinking the private rented sector would help more people become homeowners.

The number of households in the PRS

Official figures show that the number of households in the PRS has fallen by more than a quarter of a million over the past five years.

That is despite demand from prospective tenants continuing to soar, with students this year among those scrabbling to access a dwindling number of properties.

According to Zoopla, demand for private rented housing in the UK this year is up 142% compared with the five-year average, whilst the supply of such homes has fallen by 46%.

A similar trend has been reported by Rightmove who say that, in Q3 2022, tenant demand increased by 20% compared with Q3 2021.

Demand for private rented housing has gone up

Data for the National Residential Landlords Association has found that in the third quarter of 2022, 65% of landlords reported that the demand for private rented housing had gone up.

This was up almost 10 points compared with the previous year.

Local authorities have also raised concerns that the flight of housing out of the private rented sector puts extra pressure on already lengthy social housing waiting lists.

The trend of ever-increasing demand takes place despite the number of owner-occupied households in England having increased by over one million in the past five years.

‘Strategy for the private rented sector lies in tatters’

Ben Beadle, the NRLA’s chief executive, said: “The government’s strategy for the private rented sector lies in tatters.

“The fact that the supply of homes to rent is falling despite an increase in demand is a damning indictment of tax decisions which serve only to increase rents and make home ownership more difficult to achieve.

“Further tax hikes on the sector risk making an already bad situation worse.”

He added: “Ministers need to recognise that a healthy and vibrant private rental market needs to sit alongside, rather than be in competition with, efforts to support homeownership.”