Supply and demand inbalance must be addressed to support rental market

8 Apr 2024 02:18 PM

In the wake of a new report by the Resolution Foundation on rent levels across the UK’s private rented sector, the NRLA has provided its response to the key findings.

The research reveals how figures gathered by the Office for National Statistics (ONS) indicate that rents have risen, on average, by 15 per cent since January 2022. Further research from the report show how rents are set to rise substantially across the PRS over the coming year.

Responding to the report’s key conclusions, NRLA Chief Executive Ben Beadle, yesterday said:

“Rising rents are a result of a range of factors. Whilst wage growth plays a role, a key driver is the imbalance between supply and demand. 

“As the report highlights, an increasing number of people at all stages of their life now rely on the private rented sector. However, with demand far outstripping available supply, there are an average of 15 prospective tenants chasing every rented property, double the pre-pandemic level. 

“The impact of rising interest rates and tax increases should not be downplayed. 82% of buy-to-let loans are interest only and the number of buy-to-let mortgages in arrears more than doubled in the final quarter of 2023 compared to the year before. The Institute for Fiscal Studies has said that: “the more harshly that landlords are taxed, the higher rents will be”.

“Ultimately, a healthy rental market is one in which there is a supply of rented housing to meet ever growing demand. Ministers need to act to support the sector by developing pro-growth tax measures to deliver this.”

Notes

• If you'd like to read the Resolution Foundation's report in its entirety, please click here to access the relevant document.
• According to Zoopla there are more than 15 enquiries for every home to rent. This is double the rate from before the pandemic. 
• The Bank of England notes that 82% of buy-to-let loans are on interest only terms.
• According to UK Finance the number of buy-to-let mortgage loans in arrears representing over 2.5% of the outstanding balance increased by 124% in Q4 2023 compared to Q4 2022. 
• Paul Johnson, Director of the Institute for Fiscal Studies has said: “The more harshly that landlords are taxed, the higher rents will be. One of the reasons that private rents have risen so much is that government policy has substantially increased tax payable by private landlords.” You can view the article in its entirety here.
•  Savills last year noted that: “Average net profits for landlords are now at their lowest since 2007.” 
• Further information about the NRLA can be found at www.nrla.org.uk.  It posts on X @NRLAssociation.
• The NRLA’s press office can be contacted by emailing press@nrla.org.uk or by calling 0300 131 6363.