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Warning of rocketing rents as buy to let investors quit the sector

A trade body says the private rental sector is facing a major crisis - more landlords are selling properties than buying them, while all the time demand is rising.

According to research by the Residential Landlords Association based on a survey of over 2,700 landlords, almost 25 per cent have seen the demand for private rented property increase over the last three months.

Some 41 per cent say there has been no change and just 15 per cent report that demand has fallen.

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However at the same time the supply of private rented housing continues to fall. 

The RLA’s research claims that over the next 12 months almost a third of landlords - 31 per cent - plan to sell at least one property with just 13 per cent saying they plan to buy at least one.

The association says the figures are supported by recent statistics from other organisations. 

According to Rightmove, a shortage of private rented housing together with strong demand from tenants has led to record asking rents across most parts of Great Britain. 

And the Royal Institution of Chartered Surveyors has warned of an acceleration in rent increases over the next five years as a result of the demand for private rented housing outstripping supply.

RICS’ latest residential market survey warns: “Landlord instructions remain in decline. With demand still outstripping supply, rent expectations for the coming three months remain positive … Contributors are pencilling in rental growth of approximately two per cent over the coming 12 months. Significantly at the five-year horizon, the imbalance between demand and supply in the lettings market is expected to lead to an acceleration in rental growth, which is seen averaging to around three per cent per annum through to 2024.”

The RLA insists that the government strategy of recent years - to cut investment in private rented housing through various tax increases in an attempt to encourage more houses to be available for purchase by owner occupiers - is a failure.

As a result the association is calling on the government to adopt ‘pro-growth’ measures including scrapping the stamp duty levy on the purchase of additional properties where landlords add to the net overall supply of homes available, including bringing long term empty homes into use.

“Those who argue that a smaller private rented sector is good for tenants wanting to buy a home are plain wrong” according to RLA policy director David Smith.

“The government’s policies are choking off the supply of homes to rent whilst demand remains strong. This is only making life more difficult and potentially more expensive for those looking for somewhere to live. Without an urgent change of course and the introduction of pro-growth policies the situation will only become worse.”

The RLA represents some 50,000 landlords nationwide, with a combined portfolio of over a quarter of a million properties.

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  • Paul Smithson

    Tax on turnover rather than profit, no wonder people are leaving...well done shelter ! assisted by the government!

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    • 26 October 2019 06:08 AM

    There is the bonkers idea that LL buying properties for rent prevents others from buying.
    This is simply not the case.
    LL need large deposits to buy.
    Homebuyers DON'T.
    Most property purchasers use leverage to buy property.
    The leveraged LL is no more risk to the property market than homeowners.
    Indeed I would suggest homeowner leverage is far more risky than LL leverage who are mostly leveraged at no more than 75%
    Homeowners are at 95%
    A LL can have rent paid by HB if the tenant loses a job.
    Not so the homeowner.
    The ridiculous SDLT surcharge and S24 are irreparably damaging the PRS and domestic Residential market.
    LL are leaving and they won't be returning.
    Just look at the problems there are in Ireland as a consequence of the introduction of their stupid version of S24.
    LL are taking early retirement and cashing out.
    They won't be returning.
    Tenants are not buying former LL properties not are FTB.
    It is upsizers and downsizers that are doing the buying.
    Taxing LL on turnover is simply beyond the pale.
    It will never achieve its alleged objective of providing more homes for FTB to buy.
    There are more than enough properties to buy.
    Adding to that existing plentiful supply won't make FTB and tenants buy them.
    To make properties affordable you would need to see a collapse in prices of about 50%
    Never gonna happen!!
    Mind you unaffordability is only a SE issue.
    Plenty of affordable properties up North.
    But for obvious reasons nobody wants to live there.
    Hardly the fault of the mortgaged sole trader LL!!

  • Phil Priest

    In basic economics its called 'supply and demand' :-)

    we have a generation rent, now its generations rent, those who will and cannot ever buy a property. We have people migrating here, students etc who must rent as they cannot buy either.
    Section 8 means renters will have more CCJ's against them, another segment unable to qualify for a mortgage.
    = Rent increases.

    Any smart landlord will sit around for a few more years and enjoy the rental increases. One place locally has increased it rent by 20%, and the tenants paid it!!

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