Chronic shortage of rental homes to worsen post-budget
Tenants are set to find it even harder to find a home to let – with new data showing a severe shortage of rental homes is set to be exacerbated by announcements made in last month’s budget.
Almost eight in ten landlords (79 per cent) report that the demand for private rented housing was strong in the third quarter of the year, according to research from Pegasus Insights.
The data, compiled for the NRLA, showed demand to be highest in the south east, where the figure hit 84 per cent.
But while demand is high – with recent figures from Zoopla showing there are now 21 households competing for every property to rent – the Pegasus report shows 19 per cent of landlords across England and Wales sold homes over the previous 12 months.
This figure is more than double the eight per cent who purchased properties over the same period.
The number planning to sell is predicted to grow exponentially next year, with a massive 41 per cent of landlords saying they plan to sell at least some rental properties, compared to just six per cent saying they would buy.
This dip in the number of those planning purchases could be attributed to the chancellor's decision to increase the stamp duty levy on homes to let from 3% to 5, with immediate effect.
The decision was branded ‘disappointing’ by Director of the Institute for Fiscal Studies Paul Johnson, who said the move will hit supply and raise rents. He said: “It again reduces transactions, increases again the bias in favour of owner occupation, and against renting, and at least part of the consequence will be to reduce the supply of rental housing and so increase rents.”
Warning
The NRLA echoed this warning, explaining that, for the vast majority of tenants, landlords selling properties spells bad news, with only one in eight renters able to purchase a home in the area in which they currently live, according to Oxford Economics.
This will be compounded by other decisions made in the Budget which will further stifle supply in the rental market. These include moves to increase the stamp duty paid many first-time buyers, with analysis by Nationwide indicating one in five will be negatively affected by the decision to reduce the threshold at which homeowners will need to start paying.
The NRLA argues the lack of housing in the rental market will be felt hardest by those in receipt of housing benefits, who face the prospect of their support for housing costs being frozen from next year.
Ben Beadle, Chief Executive of the NRLA said: “Tenants the length and breadth of the country know that there are not enough homes to rent. Rather than seeking to tackle it, the Government is instead doubling down on policies that have caused the chasm between supply and demand to widen in the first place.
“Whilst landlords selling up might benefit a minority of tenants in a position to afford a home of their own, the vast majority will face a growing struggle to access rental homes.
“It’s time for a change of course. We need policies to support the provision of more decent quality homes for private rent alongside all other tenures.”
