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Supply of rental properties falls as demand increases

According to the Residential Landlord Association’s (RLA) latest quarterly research report, published last week, 22 per cent of landlords plan to sell at least one of their properties over the next year, with just 18 per cent planning to buy additional properties to rent.

With responses from almost 3,000 landlords, the RLA found that 33 per cent have seen an increase in demand for homes to rent over the past three years.

47 per cent said that they expected to increase rents over the next year with 35 per cent blaming the changes to mortgage interest relief which will see landlords taxed on their turnover rather than profit.

Private sector tenants now face a perfect storm with the imbalance in the supply and demand for rental properties set to increase unless the Government reverses its anti-buy-to-let policies.

Commenting on the findings, RLA Chairman, Alan Ward, said: “As demand continues to increase for homes to rent, punitive tax changes are discouraging investment by the majority of good landlords who want to provide accommodation.

“Whilst efforts by the Government to support institutional investment in the sector are welcome, this will remain a drop in the ocean.

“To meet demand, we need pro-growth taxation that actively supports and encourages the majority of landlords who are individuals providing good housing, to invest in the new homes to rent we so desperately need.”

Meanwhile, Countrywide reported that rents in London ended the month 2.1% up on last year, bolstered by an 18% year-on-year fall in the number of homes available to rent.

Martin Skinner, Chief Executive at Inspired Homes, said: “This is exactly what I said would happen when they announced the changes to mortgage interest relief and the additional properties SDLT surcharge in the 2015 Budget. Private landlords are responsible for a fifth of all UK homes. It’s a trillion-pound market which can’t be easily replaced by build to rent and institutional investment.

“The institutional investors we are speaking to are looking for yields in excess of six per cent when most build to rent schemes in the South East are closer to four per cent. Only micro-unit schemes – micro-apartments and co-living, student-type shared accommodation but for rent to non-students – can produce the level of returns they are after yet space standards prevent delivery at scale.”

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