Housing Minister Accepts There Are Fewer Homes To Rent

Housing minister Felicity Buchan has written to MPs expressing concern at the chronic shortage of homes to rent in the private rented sector amid an ever widening supply-demand imbalance in the market.

Following her appearance before the Levelling Up, Housing and Communities Committee last month, she has written to MPs explaining that there were 260,000 fewer households in 2020/21 compared to the high point in 2016/17, according to the English Housing Survey.

Chris Norris, policy director for the National Residential Landlords Association, has responded to an acknowledgement from the minister “that demand is currently outstripping the supply of properties available to let”.

He said: “We welcome the minister’s recognition of the supply crisis in the private rented sector, but the Government needs to rectify the mistakes it has made in causing this.

“Since 2015 successive chancellors have sought to choke off investment in the market with a series of tax hikes. All this has achieved is to cut supply whilst demand continues to soar for fewer and fewer properties. The ultimate losers in this are tenants, who are finding it more difficult to access the homes they need.

“We cannot continue to limp along without a pro-growth strategy which embraces tax measures to support investment and ensure renters can find a place to call home.”

Demand for rental homes is at an unprecedented level, up over 20% year-on-year. This is according to Nicky Stevenson, MD of Fine & Country UK, who adds that that higher mortgage costs and signs of a market recalibration are leading some prospective buyers to rent for longer, or to put on hold their next property purchase. She notes that the availability of new properties continues to lag behind demand and competition among renters is fierce.

She said: “Looking at the prime rental market, the rental threshold of a prime property across England and Wales now stands at £2,800, up from £2,400 a year ago. The average prime market rent is £3,715, which equates to a year-on-year rise of 17%. A consensus of independent forecasts expects rental value growth in the UK of 4.8% over the course of 2023, with compound rental growth set to exceed 20% in the five years from this year until 2026,” Stevenson comments.

She adds that forecasters are predicting the UK’s major cities will perform strongly over the next 12 months.

Stevenson continued: “Alongside London, activity levels in regional cities including Manchester, Birmingham, Leeds, Bristol and Liverpool are anticipated to remain high. With running costs and energy efficiency increasingly on the mind of homeowners and renters alike, new build city centre homes are likely to be in high demand. While the pandemic caused a race for space among renters, higher energy costs are causing many people to change their focus to smaller properties that cost less to keep warm.

“Rightmove report studio apartments have overtaken one-beds as the most in-demand type of property for renters. Competition is up over 70% year-on-year as stretched affordability has seen renters look for smaller properties to enable them to stay in central locations and enjoy the benefits of a city centre lifestyle.”