The number of rental properties in Britain has drastically declined, with landlords selling off their buy-to-let investments due to soaring interest rates and uncertainty over upcoming regulations.
According to a report by estate agents Hamptons, there were 40% fewer rental homes available last year compared to April 2019, with a total of 163,000 privately rented properties disappearing from the market between 2019 and the end of 2023.
This exodus has been driven by a series of tax hikes, starting with the introduction of a 3% stamp duty surcharge on second homes in 2016, followed by the phased removal of mortgage interest tax relief beginning in 2017. The recent surge in interest rates and the looming Renters Reform Bill have further deterred many landlords from maintaining their investments in the rental sector.
The long-term shortage of housing stock has exacerbated the situation, pushing rents higher. Last year, tenants renewing their existing contracts saw an average rent increase of 8.3%, raising the average rent to £1,151 per month. However, this is still cheaper than rents for newly let homes, which averaged £1,329 per month, although rental growth for these properties was slightly lower at 6.4%.
Aneisha Beveridge from Hamptons noted that higher market rates have compelled many tenants to stay put for longer periods. According to the English Housing Survey, the number of tenants moving home fell by 17% in 2022-23 compared to the five-year pre-pandemic average. “The large gap between market rates and what many tenants are paying is a big disincentive for them to move unless they have to,” Beveridge said. “Moving increasingly means getting less home for more money.”
Official data released this week indicates that over 2,000 households face homelessness every month in England due to landlords exiting the sector. Ben Beadle, CEO of the National Residential Landlords Association, highlighted that landlords selling up is the biggest challenge renters face. “The only answer is to ensure responsible landlords have the confidence to stay in the market and sustain tenancies,” he added.
In 2023, 140,000 landlords sold their properties, while 100,000 entered the sector, according to Hamptons. Although the year-on-year rental stock increased by 28%, the rate of growth has slowed, having peaked at 34% in January 2024. These figures do not account for properties added by institutional “build-to-rent” investors, which Hamptons says has not been sufficient to offset the overall decline in rental stock.
Separate data from Rightmove indicates that an additional 50,000 rental properties are needed to restore the supply of rental homes to pre-pandemic levels. As the market continues to adjust to these pressures, both tenants and landlords face ongoing challenges in navigating the evolving landscape of the rental property market.
Read more:
160,000 Rental Properties Lost as Landlords Exit Market Amid Rising Costs and Regulatory Uncertainty
