PRS supply crisis: The message is getting through
Following relentless campaigning by the NRLA, politicians and journalists have now come to accept the country is in the grip of supply crisis in the private rented sector. NRLA Chief Executive Ben Beadle shares his thoughts on what’s happening on the ground – and the action needed to tackle the issue.
The figures are stark. More than two thirds of landlords saw demand for rental properties increase in the second part of this year, as the supply of rental homes continues to dwindle.
Landlords and agents are seeing an average of 20 requests to view each available property, with rents hitting record levels.
But don’t be fooled, these increases are not about further lining landlords’ pockets, with rising costs and other changes meaning one in ten landlords are now operating at a LOSS with landlord profits at a 16-year low.
The latest figures collected on behalf of the NRLA from the research consultancy BVA-BDRC indicate overall net profitability has fallen by 11% since the second quarter of 2021, with recent falls the largest recorded since 2007.
Rising rents
Figures released by the Office for National Statistics last month showed UK private rental prices increased by 5.3% to July 2023, the largest annual percentage change since the ONS began measuring UK-wide data in January 2016.
Within England, the highest annual percentage change in private rents was in the West Midlands, Yorkshire and the Humber, and London, at 5.5%.
London's annual percentage change in private rental prices was 5.5%, above the England average, and its highest annual rate since the data started to be collected.
At the same time housing benefit paid to those on the lowest incomes now covers just 18% of the lowest priced properties, with the number of households seeing a shortfall between the benefits they receive and the rent they must pay now topping 800,000.
Warning
The NRLA has been warning of the ticking timebomb for some time, but it seems the message is now finally getting through, with the housing crisis moving up and up the news agenda.
A deep dive article in The Sunday Times this month asking ‘What’s really going on inside Britain’s broken housing market’, quoted NRLA data from a 2023 landlord survey showing that a third of investors were planning to reduce the number of properties they rent out, an all-time high, and up from 20 per cent the previous year.
It is clear that what we are seeing now is unsustainable, so the next question has to be what can be done about it?
The current supply crisis faced by renters follows decisions in 2015 by then-Chancellor George Osborne to restrict Mortgage Interest Relief in the private rented sector to the basic rate of income tax and introduce a 3% stamp duty surcharge on buy-to-let homes.
This has been compounded by the recent hike in interest rates affecting those with buy-to-let mortgages, with landlords on average paying an additional £275 a month in increased payments, and the spectre of major changes on the horizon in the form of the Renters’ (Reform) Bill and changes to Minimum Energy Efficiency Standards.
It is clear that without Government action, renters face a bleak future as growing costs lead to a loss of more rental homes from the market and fewer and fewer options about where to live.
Reinstating mortgage interest relief should now be the Government’s top priority if it wants to halt an exodus of landlords from the sector and reinvigorate the market to make it more attractive to investors.
At the same time it needs to reverse the housing benefits freeze, allowing the most vulnerable tenants to pay their bills during these challenging economic times.
More information
To add your voice to the campaigns to reverse tax changes and lift the benefits freeze visit our campaigns pages. Here you can access our write to your MP toolkit, which includes template letters you can edit to reflect your own experiences.