Industry News Sally Walmsley 04/07/2024

New data shows 120,000 extra rental homes needed

A hundred and twenty thousand extra rental properties will be needed to meet current demand, according to a new analysis from property portal Rightmove.

The extra homes are needed to return rental growth to what it describes as more ‘normal level’ of around 2%.

The data backs the NRLA’s concerns about a supply crisis in the face of ever-increasing demand. The platform claims there are now, on average, 13 household competing for each property to rent, with Zoopla putting the figure at 15.

This is why the association has been campaigning for pro-growth taxation measures in the run up to the election, specifically removing stamp duty on additional homes and reintroducing mortgage interest relief in full to stimulate growth.  

What is the extent of the problem?

The Rightmove data suggests that the typical advertised rent outside London reached a record £1,316 per calendar month in May – 7% higher than a year earlier.

The figure for London was £2,652 a month – almost three times the £894 asked for in north-east England, although Rightmove suggests an improvement in the balance between supply and demand meant annual rent growth has slowed from its peak of 18% in 2022 to 4% in May this year.

And it isn’t just Rightmove predicting the need for significant numbers of new rental homes. The Royal Institution of Chartered Surveyors has spoken of a “huge mismatch” between supply and demand in the sector, with renters facing “ever-rising living costs and plummeting affordability levels.” 

Elsewhere Savills has warned that up to a million new homes for private rent will be needed across England and Wales by 2031 to meet demand. 

Call for landlord incentives

Echoing NRLA calls, Rightmove is calling on the next government to incentivise landlords to invest in more homes for tenants to help tackle the imbalance between supply and demand and stabilise rental growth.

It said that in many areas there are ‘nowhere near enough homes to satisfy the number of tenants looking to move’.

Tim Bannister, Rightmove’s property expert said: "We’ve been talking about the imbalance between supply and demand in the rental market for a long time now, so it’s easy to forget that there was a time before the pandemic where rental price growth was more stable.

"The next government should be prioritising an improvement to the planning process, an acceleration of housebuilding, and encouraging more supply into the rental market."

NRLA Chief Executive Ben Beadle said: “The Rightmove data – and that from other sources – backs up what we too have been saying for some time; that we need to take action now to prevent an even greater crisis further down the line.

“Landlords need, not only pro-growth taxation, but confidence to stay in the sector – something that’s in increasingly short supply given the uncertainty surrounding PRS reform.

“We want the new government to recognise the value of private sector landlords in providing essential homes to let at a time when they are needed more than ever, with recent research showing smaller landlords contribute a huge £45 billion to the UK economy and are responsible for supporting 390,000 jobs.

More information

To read more about the NRLA’s key asks of the next government click here.

Sally Walmsley

Sally Walmsley Magazine and Digital Editor

Sally is the Magazine and Digital Editor for the NRLA. With 20 years’ experience writing for regional and national newspapers and magazines she is responsible for editing our members' magazine 'Property', producing our articles for our news site, the weekly and monthly bulletins and editorial content for our media partners.

See all articles by Sally Walmsley