NRLA chief executive Ben Beadle on what needs to change to improve the supply of homes to let and make it easier for renters to find suitable properties in the places they want to live.
Finding a rental home is tough, with latest figures from Zoopla showing a severe shortage of property to let, with 21 households now competing for every rental home.
Data from Pegasus Insights, complied by the NRLA showed almost eight in 10 landlords – 79 per cent – experienced strong demand for homes in the third quarter of the year.
In the south east the figure was even higher, hitting 84%.
Yet while demand increases more and more landlords are selling homes, with 19% of landlords in England and Wales selling in the last 12 months.
To put this into context only 8% – less than half that figure – bought homes in the same period.
You don’t need to be a maths whizz to realise that this doesn’t add up.
Worrying picture
And when we look forward to next year the picture, when it comes to supply, is just as bleak.
The number of landlords planning to sell off properties is predicted to increase, with 41 per cent of landlords saying they plan to sell at least some rental homes.
With just 6% saying they will buy, NRLA believes the crisis will be amplified, meaning not only a chronic shortage of homes, but also increasing rental prices.
And it’s not just us saying this.
Director of the Institute for Fiscal Studies Paul Johnson said the move will undoubtedly hit supply and raise rents. He said: “It again reduces transactions, increases again the bias in favour of owner occupation, and against renting, and at least part of the consequence will be to reduce the supply of rental housing and so increase rents.”
It appears this is already happening, with data released by the ONS showing that in the 12 months to October this year, rents rose by 8.7% to an average of £1,348 in England. In London, where demand for rental homes is consistently high, the increase was 10.4%.
What’s causing the issue?
NRLA believes that a perfect storm of tax changes announced in the recent budget – which increased the stamp duty levy on additional homes from 3% to 5% – are likely to stifle investment in new rental homes and that the imminent and widespread legislation changes on the horizon are also having an impact.
And while changes to stamp duty have previously been introduced to ‘level the playing field’ between landlords and first-time buyers, the truth is that, according to research by Oxford Economics, only one in eight renters is able to purchase a home in the area in which they currently live.
Analysis by Nationwide has also indicated one in five first time buyers will be negatively affected by the new decision to reduce the threshold at which homeowners will need to start paying stamp duty.
All the while mortgage rates are expected to remain higher for longer than expected according to the Office for Budget Responsibility.
Those on low incomes to be hit hardest
Yet again it is those at the lower end of the market that will feel this most keenly.
Those in receipt of housing benefit will not only see their support for housing costs frozen from next year, but they will also be hardest hit by a lack of choice and increasing rents.
Yes, of course, some tenants will benefit from landlords selling, if they are in a position to buy; however, the vast majority will simply face even more challenges when it comes to finding a home to rent.
It’s now crucial to restore the balance between supply and demand and it’s something we are asking the Government to address head on, working with ourselves and others in the sector to bring about positive change for landlords and tenants alike.
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About the author
Ben Beadle is chief executive of the National Residential Landlords Association (NRLA), the UK’s largest trade body for landlords.
A landlord himself since the age of 20, Ben started out as property manager before working his way up through the ranks at the Tenancy Deposit Scheme.
He was then Operations Director at property management business Touchstone before overseeing the merger of the National Residential Landlords Association (NLA) and Residential Landlords Association (RLA) to create the new trade body earlier this year.
His key aims as head of the organisation are to strengthen the voice of landlords in Westminster and Cardiff, to improve the reputation of landlords in the media and to support members through information, training and accreditation.
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The views expressed in this content are solely those of the author alone and do not necessarily represent the views of TDS, its officers, or employees. To read more on TDS views, visit our Policies & Procedures webpage
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