Rental Market Shrinkage Due to Landlords Selling Up
A shortage of available homes for rent is forcing people hoping to find a property to go to increasing lengths to secure a place to live.
The shortage of available homes is pushing up monthly rents, deposits and creating bidding wars among would-be tenants. Some of the lengths tenants are willing to go to include:
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- Putting up cash in advance
- Offering landlords CVs for their children
- Sharing photos of their well-behaved dogs
Industry body Propertymark says there has been a sharp fall in the number of rentals on the books of letting agencies.
A survey of more than 440 letting agency businesses by Propertymark, across 4,000 branches UK-wide, found that the number of available rentals on their books have, on average, halved from over 30 to just 15.
Agent Adam Kingswood says he’s never known the market like this in his two decades in the business. He said his agency had to stop taking viewings after just a few hours of a property being listed.
Mr. Kingswood lets properties in The Park area of Nottingham, which is regarded as one of the most popular spots in the city due to its wide leafy streets and Victorian houses:
Out of those who turn up, the majority will want the property and in most cases the landlord has a choice of what tenant they want to go with.
This leads to renters vying to be chosen by landlords and becoming more desperate.
Mr Kingswood added:
Two years ago, I could count on one hand the amount of times a tenant would offer above the asking price for rent. Now people regularly offer three or even six-months rent in advance or an extra £50 extra a month above the asking price.
The annual rental survey published last month by property portal Rightmove, revealed:
- Asking rents are already at their highest ever level
- Asking rents are up 11% year-on-year to £1,088 per month outside of London
Rocketing prices are also causing anxiety to sitting tenants.
Landlords leaving the market
Propertymark also reports that landlords are selling up as they are becoming increasingly unhappy with increased costs and red tape. Some are switching from renting to offering holiday lets.
Landlord Lou Valdini had two flats in South Yorkshire and a flat in London which he rented out. He’s now letting them all go because he feels ‘disillusioned by the sector’, having lost around £20,000 during the pandemic due to 16 months of rent arrears and other costs. He added:
The stress was huge. And I’m not a professional big company with people working for me to sort these things. It all fell on my shoulders.
Another landlord, Mick Roberts, has more than thirty properties across Nottingham. His tenants are all on housing benefits, mostly families but many pensioners.
Mr. Roberts says he has ‘a conscience’ about keeping rent down for his tenants and that his tenants are so scared their rent will go up they are too terrified to ask for repairs. He also states instances of parents sleeping on the sofa of one-bed apartments with three children in the bed because they can neither find nor afford a bigger house to rent.
Mr. Roberts is reluctant to raise rents for those already in his houses, but admits that he asks for the market rate from any new tenant.
Changes to taxation have made letting properties less profitable while at the same time legislation regarding maintenance and energy compliance have pushed up landlords’ costs as well as other recently announced reforms, including the expected increase in the EPC minimum rating.
The Department for Levelling-Up, Communities and Housing said, ‘good landlords’ had nothing to fear from the reforms, which were designed to ‘give tenants greater security to challenge unreasonable rent rises and poor practice. A spokesperson added:
We’re supporting vulnerable renters to help them meet the rising cost of living and stay in their homes, as well as investing £11.5bn to build more of the affordable, quality homes this country needs – including tens of thousands for social rent.
Where can landlords find support?
If you are considering leaving the market because of the additional pressure, there are other options:
- List for free. With Mashroom, you can find your next tenant for free, which will drive down your costs
- Get insured. Many landlords were hit by rent arrears during the pandemic, don’t let that happen to you. Make sure you have Rent Guarantee Insurance to protect your investment. Home Emergency Insurance also protects your pocket against anything that might go wrong in your property
- Stay up-to-date. We post the latest news and updates and our webinars cover everything you need to know, so make sure you sign up for regular updates!