5 Sep 2024
Private landlords look set to leave the rental market quickly, but will this be a problem or an opportunity for private tenants?
Private landlords look set to leave the rental market at a rapid pace, according to research from property website Rightmove.
He said rising costs, taxes and laws are making it more attractive for some landlords to sell up.
But will this be a problem or an opportunity for private renters?
The landlord left
Rightmove says it is the UK’s largest property portal, and has combed through the homes currently listed on its website.
It found that 18% of properties currently for sale were previously offered for rent.
That 18% share is the highest that Rightmove has seen since it started measuring returns in 2010 – when it showed just 8%.
And the trend is even more pronounced in London – where 29% of homes sold once down are places to rent.
Landlords say this points to a “worsening crisis” in private renting. The National Association of Residential Landlords today warned that every rental home sold “accelerates the imbalance between supply and demand.”
And that imbalance has become dramatic in recent years. Rightmove reports that in August there were an average of 19 inquiries for each rental property. It’s better than a year ago, when I was 28! But before Covid, only 9.
Landlords claim many changes are encouraging landlords to sell: rising interest rates have pushed up mortgage payments and there is speculation that they will have to pay more capital gains tax in the future (giving them an incentive to sell their properties now).
Opportunity?
But could it also provide an opportunity for hard-pressed tenants? Does that mean that some tenants can become buyers and get properties that landlords don’t want?
Rightmove says “…these homes can offer more choice for first time buyers.”
If this happens, it will reverse one of the most fundamental changes in the housing market (and British society) over the past 3 decades.
In 2000, 10% of all households in England were private renters. By 2023, that share will nearly double to 18.8%.
And as the number of private renters has increased, the number of people buying property with a mortgage has decreased: from just over 42% to just 30%.
The big question is how many tenants can afford it.
Research last month from Hargreaves Lansdown, a private investment firm, found that the average rent in the UK is £1,279 a month.
But calculate that a first-time property buyer with a 10% deposit could pay £1,208 a month.
This shows that the gap between renting and borrowing is not huge when it comes to monthly mortgage payments.
But Hargreaves Lansdown points out that the problem will be the deposit: 10% of the average house price is £241,502 for first-time buyers or £24,150. The research shows that the average rental house has £79 at the end of the month – so that deposit seems like a huge mountain to climb.
Tenant rights
Generation Rent, which campaigns for the right to rent, agrees that there is an opportunity for some renters to become buyers and says it will be a fundamental change from what happened over the last 2 decades.
Dan Wilson Craw, a spokesman, told Channel 4 News it was inevitable that landlords would have to sell to realize the government’s talk of re-home ownership. His concern is how the transition will go.
They were worried that landlords trying to sell would drive out tenants – so they had empty properties to market. They want the protections for those in the Tenants’ Bill of Rights that Labor promised.
But the big demand is that the rental experience should be better – even if you don’t expect to buy one day. He argues to stop no-fault evictions, but also wants a system to prevent unaffordable rent increases – linking to whichever is the most inflation or wage increases.
So both tenants and landlords can receive several opportunities to transfer property. But the other thing they agree on, the problem of the housing market is not only to change the ownership of the existing property. There is still a need to increase the number of houses being built – whether to buy or rent.