Minister accepts supply-demand pressures increasing rents

The government has confirmed that rising rents are being driven by a lack of available housing, in the process emphasising the NRLA's stance on the supply crisis in the PRS.

The government’s acknowledgement of this trend occurred as part of an answer to a written question from Bell Ribeiro-Addy MP, in which the member asked whether the Treasury had a view on reports suggesting that rent inflation have had an impact on economic growth.

By way of a response Economic Secretary to the Treasury Emma Reynolds MP stated that rental prices “are ultimately determined by the total supply of housing, relative to demand”.

The Minister also observed that “affordability of housing has fallen drastically, particularly in major cities, as too few homes have been built”.

Responding to the Minister’s comments on behalf of the NRLA, our Chief Executive Ben Beadle said: 

“The Minister is right. Rents are going up because there are simply not enough properties to meet demand, and measures proposed by the Government are going to worsen an already dire situation.”

Figures from the property portal Zoopla show that there are an average of 12 renters chasing each home for rent, double the level seen before the pandemic. 

Government data also suggests that a third (31 per cent) of landlords say they are planning to cut the number of properties they rent out. This has increased from 22 per cent who said the same in 2021.

Ben Beadle added:

“Changes such as the hike to stamp duty on the purchase of homes to rent that was announced in the Budget will only further dampen supply. Likewise, the lack of preparation for the increased pressures on the courts due to the Renters’ Rights Bill will deter investment in new homes to rent. 

“It is also of serious concern that proposals to improve the energy efficiency of private rented housing contain no detail of the financial package needed to support investment in the required works. Without such support, these changes will pile yet more cost pressures onto the sector. 

“The Government needs to address the shortage of homes for private rent as the only viable route for improving affordability in the sector. Until it does so, it will be tenants that continue to suffer the consequence of the rental housing supply crisis.”  

-ENDS-
 
Notes:

•    Responding to a parliamentary written question, the Treasury Minister, Emma Reynolds MP, has said: “Rental prices are ultimately determined by the total supply of housing, relative to demand. Affordability of housing has fallen drastically, particularly in major cities, as too few homes have been built.”

•    In October the Chancellor used the Budget to announce that the stamp duty surcharge on the purchase of homes to rent out would increase from 3% to 5%. In response, Paul Johnson, Head of the Institute for Fiscal Studies said: “I have long said stamp duty is among our worst taxes. So what do we have? An increase for those buying second properties. You might think fine: a tax on rich people and landlords. But those looking to rent will pay part of the cost as fewer properties made available. I despair...”. 

•    At Report Stage of the Renters’ Rights Bill in the House of Commons, the Housing Minister, Matthew Pennycook MP, said in respect of the Bill’s provisions to end Section 21 repossessions: “Court readiness is essential to the successful operation of the new system. That is why my officials and I are working closely with the Minister for Courts and Legal Services and her team to ensure that the Courts and Tribunals Service is ready when the new tenancy system is brought into force.” The Government has so far failed to define how it defines the courts being “ready”. 

•    In February the Government published a consultation on proposals to improve the energy efficiency of private rented housing. It included no proposals to support the investments required in energy efficiency works. This is despite calls by the Committee on Fuel Poverty for just that. Last year, the Committee said in a letter to the previous Government: “Currently the major energy efficiency programmes are targeted at the owner occupier sector (e.g. Energy Company Obligation, Home Upgrade Grant, Great British Insulation Scheme) or the SRS (Social Housing Decarbonisation Fund). Previously the Committee on Fuel Poverty argued that the PRS be treated as a commercial sector as landlords are effectively managing a business that should meet required standards. Landlords could be helped to meet these standards through tax offsets for improvements, loans or potentially grants for landlords with a low profit margin in areas of low rental value.”

•    Zoopla’s most recent data on the state of the rental market can be accessed here. 

•    The Government’s most recent English Private Landlord Survey notes that: “Landlords in 2024 (31%) were more likely than in 2021 (22%) or 2018 (16%) to say that they were planning to decrease the number of properties/sell them all, with a corresponding decline in the proportion of landlords who said they would keep their portfolio size the same. The proportion of landlords saying they would increase their portfolio was lower in 2024 (7%) compared with 2021 and 2018 (both 11%).”

•    Further information about the NRLA can be found at www.nrla.org.uk.  It posts on X @NRLAssociation.

•    The NRLA’s press office can be contacted by emailing [email protected] or by calling 0300 131 6363.