The private rented sector is feeling the squeeze in some areas, with tenants outnumbering landlords and rental homes in higher demand than ever.
Landlords across the UK have been experiencing huge demand for their properties in recent months, although this has begun to level out in some areas. Overall, though, the number of renting households continues to climb across the country as the balance between homeowners and renters continues to tip.
In the north-west of the country in particular, swathes of tenants are seeking rental homes. According to the latest data from Propertymark, October saw an average of 163 new tenants registered per agency across the region. Landlords in this region with good quality homes on offer, particularly in rental hotspots such as Manchester and Liverpool, are likely to see their properties snapped up quickly by waiting tenants.
An uneven spread
On average across the UK, the average number of prospective tenants per agency branch in October was 71. This was down from the previous month, where 83 tenants were registered per branch.
In London, rental stock was the lowest in the country. Propertymark reported just 69 properties managed per agency branch in its October findings. This compares to a UK average of 196 rental homes per letting agent branch. In the north-east, by contrast, there was a huge 350 rental properties managed per branch on average.
The figures show that, while the supply-demand gap may be evening out slightly, there is still a dearth of rental homes in some areas in particular. Landlords in these areas, particularly those with the most to offer, can expect to see minimal void periods during this time of high demand.
Too many targets for landlords?
In recent years, the government has put a big focus on homeownership. While this is nothing particularly new, there have also been some new measures that have made the private rented sector less appealing for some landlords.
While many are able to navigate the changes and continue to run successful rental properties, it has inevitably led to some leaving the market. These changes include new energy efficiency targets, licensing changes for some HMOs, and tax changes.
Propertymark’s CEO Nathan Emerson says: “The PRS remains under pressure, however demand has fallen for the second consecutive month and the number of tenants experiencing rent increases has fallen. There are clear issues with the availability of properties, with some regions, London in particular, being in very short supply of rental stock.
“This is being exacerbated by the current legislative and regulatory changes taking place, as well as energy efficiency targets, both of which could squeeze landlords and make them consider leaving the market. Under this increasing pressure, it is crucial that measures are introduced to retain landlords and incentivise more into the sector.”
Catering for today’s renters
Most industry experts agree that it is important to tailor the housing market for tenants as well as homeowners. Paragon Bank also recently called on the UK government to do more to help landlords in the sector, which will in turn provide homes for thousands of tenants.
Richard Rowntree, Paragon Bank’s managing director of mortgages, said: “The impact of the stamp duty saving on regions where house prices are generally higher is clear to see, with transactions in London and the South increasing by approximately half. There were also strong increases in the South West, North East and East Anglia.
“Despite this, tenant demand still outweighs supply in large swathes of the country, which is leading to record levels of rental inflation, and transactions still remain significantly below the level experienced before the stamp duty surcharge was introduced in 2016.”
“As the Government pursues its ‘levelling up’ agenda, it needs all facets of the housing market to be working effectively, including a sufficiently sized private rented sector to facilitate labour market mobility and provide good quality homes for those who cannot or don’t want to own a home.”