Industry News Sally Walmsley 11/04/2024

Supply crisis the crux of rising rents

Supply and demand issues are driving rents ever higher, with urgent action needed to support landlords and tenants.

The NRLA has called for positive action to help meet the increasing demand for rented homes, after new figures from the Office for National Statistics (ONS) showed rents have risen by 15 per cent since January 2022.

The association made the comment in response to a new report by the Resolution Foundation on rent levels in the private rented sector (PRS), which include predictions will rise even further in the next 12 months.

It challenged the think tank’s assertion that wage growth is driving increases, saying the situation is more complex – with the supply crisis front and centre. This is being exacerbated by the current economic landscape and recent increases in interest rates and taxation.

Chief Executive Ben Beadle 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.

“As the Institute for Fiscal Studies said, the more harshly 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.”

What does the NRLA want to see?

The Royal Incorporation of Chartered Surveyors (RICS) estimates that 1.8 million new homes to rent will required by 2025 and the NRLA believes that more needs to be done to encourage landlords to remain in the sector and continue to invest.

In a bid to tackle the growing gap between the number of landlords leaving the sector and those continuing to invest it is asking Governments in England and Wales to:

  • Abolish stamp duty on second homes, where the property is adding to the net supply of housing.
  • Abolish the equivalent Land Transaction Tax in Wales
  • Reduce the Capital Gains Tax rate further
  • Reverse the unfair changed to Mortgage Interest Relief.

More information

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