Is there a shortage of rental properties?

Is there a shortage of rental properties?

Yes, from our experience the shortage is very apparent from a supply and demand perspective. This can be explained by the higher interest rates making it more costly to obtain a mortgage and subsequently we have seen more and more people holding off purchasing a property and turning to the rental market. However, in line with the increase in interest rates landlords with buy-to-let mortgages are also feeling the pinch and, in some cases, have made the difficult decision to sell. This is not to mention previous reports showing that the number of rental properties had already fallen by a staggering 40% by the end of 2022, indicating that interest rates are not the only driving force for the decline (BBC News, 2022).

First came the introduction of a higher rate stamp duty for additional properties in April 2016, causing new second-home owners to pay a 3% premium on Stamp Duty Land Tax (HM Revenue & Customs, 2023). Then came the more stringent regulation requiring landlords to obtain an EPC of D or above to be eligible for most standard buy-to-let mortgages. Finally came the gradual reduction in tax relief for landlords which undoubtedly reduced profit margins, but what does this mean for the rental market now? Well unfortunately for applicants, the decreased available rental properties coupled with the influx of competition and costs can only mean higher rents. The Office of National Statistics recorded a rent rise of 4.7% in the UK in the 12 months to February 2023 (Office for National Statistics, 2023).

In conclusion, it is obvious that the UK rental market is constantly changing, and it does not appear that it will settle down anytime soon! While this is a great opportunity for potential investors, we appreciate it does make it difficult for renters. Our advice would be to keep your eye out, act fast and don’t get bogged down with rejection, it really isn’t a reflection on you but more the high level of demand in the industry – you will find somewhere!

References: 
BBC News (2022), Warning of fewer rental properties as landlords squeezed. Available at: Warning of fewer rental properties as landlords squeezed - BBC News [Accessed: 11 July 2023]
HM Revenue & Customs (2023), Higher rates of Stamp Duty Land Tax. Available at: https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property [Accessed: 11 July 2023]
Office for National Statistics (2023), Index of Private Housing Rental Prices, UK February 2023. Available at: Index of Private Housing Rental Prices, UK - Office for National Statistics (ons.gov.uk)