New figures from property consultancy TwentyCi lay bare the challenges faced by the lettings sector.

In the third quarter of 2022 new instructions and lets agreed were down by 25 and 19 per cent, respectively; and in contrast to the owner-occupied sector, there was a marked supply and availability issue, as some landlords withdrew from the market because of tax changes put in place in 2019 reducing incentives.

The consultancy adds that the lack of supply is compounded on the demand side as tenants are undoubtedly deferring decisions to buy as a result of higher house prices, inflation and interest rates. 

Looking at the regional picture, TwentyCi says that as of last month all regions have settled at around 1.5 months of available stock – this time last year it was two months.

The consultancy, in its latest market snapshot, says: “Pressures on the supply and demand side mean that this situation is unlikely to improve in the near term. Landlord incentives have been dulled by legislative and tax changes, whilst the reduction in buy-to-let mortgage products will inhibit any significant injection of new supply. Households deferring decisions to buy due to adverse economic conditions will tend to increase demand.” 

The average asking price across the UK was £1,605 per month in Q3 2022, 19 per cent higher than in Q3 2019. 

This trend of increase is likely to continue as higher interest rates and inflation may be passed on by landlords whilst supply constraints and demand pressures continue to apply.