UK homes for rent slump to 14-year low

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The variety of UK properties accessible to lease has dropped to a 14-year low, piling extra strain on tenants competing to search out an inexpensive place to stay, new evaluation has discovered. 

In June, 241,000 properties had been accessible within the non-public rented sector, in contrast with 370,000 in June 2019 — a fall of over one-third (35 per cent), in accordance with consultancy TwentyCi. 

Accumulating UK rental information from sources together with property and lettings brokers and on-line property portals, TwentyCi mentioned rental availability was at its lowest degree because it started recording the information in 2009. 

“Availability is diminished and affordability is down,” mentioned Colin Bradshaw, chief buyer officer of TwentyCi. “There are fewer properties they usually price extra. That’s not nice for renters.”

Mortgaged landlords and their tenants have been beneath growing pressure as increased rates of interest and excessive demand for lets have led to sharp rises in rents over the previous two years. 

Whereas information has but to point out a large-scale exodus of landlords from the market, Bradshaw mentioned the affordability of mortgages had dropped dramatically previously two months, undermining landlords’ enterprise fashions and inflicting some divestment amongst buyers in rental property portfolios. 

“The yield place on any asset that you simply personal the place it’s mortgaged is more likely to be severely eroded,” he mentioned.

Common buy-to-let mortgage charges jumped sharply this week, hitting 6.97 per cent for a two-year fastened fee deal, up from 6.69 per cent final week, in accordance with information supplier Moneyfacts. Nearly all of buy-to-let mortgages are interest-only, amplifying the consequences of upper charges on month-to-month funds. 

As inventory ranges have dwindled, rents have risen sharply. TwentyCi mentioned rental costs had gone up by 23 per cent since 2019, with an increase of 8 per cent in common rents over the six months to June in contrast with the identical interval final 12 months. 

The Financial institution of England this week mentioned in its monetary stability report that “many landlords” had been more likely to search to boost rents to offset their increased prices.

This may compound renters’ relative disadvantages, it instructed, since they usually had decrease incomes than householders and low ranges of financial savings. “Increased prices relative to incomes might result in an elevated reliance on shopper credit score, or difficulties paying off current shopper credit score or different kinds of debt. It could additionally improve their vulnerability to future opposed shocks,” the report mentioned.

Simon Cooper, a associate at West Nation property agent Stags, mentioned the provision crunch had led to better competitors amongst potential tenants. In feedback accompanying a month-to-month survey from the Royal Establishment of Chartered Surveyors, he mentioned: “The huge scarcity of homes to lease ensures that almost all properties are let to high quality tenants virtually instantly. Not surprisingly that is having an upward impact on rents.”

A associated issue driving these shortages is bigger inertia amongst current tenants, who worry giving up a letting solely to face increased prices elsewhere. Ben Twomey, chief govt of marketing campaign group Technology Hire, mentioned: “Many tenants would possibly wish to transfer however merely can not as a result of the lease on a brand new tenancy is now far increased than what they’re presently paying. 

“Fewer properties have gotten accessible and people who do are being snapped up extra rapidly by tenants who do want to maneuver. That’s preserving rents excessive and unaffordable for a lot of.”

That is borne out by TwentyCi’s newest information, which discovered the common rental tenancy size was 4.8 years, up 32 per cent from 3.6 years in 2019. It added there was vast variance between areas, with a mean of seven.1 years in Wales in contrast with 4.4 years within the Southeast. 

The information additionally factors in direction of a pointy distinction within the availability of properties to lease at both finish of the worth spectrum. For premium properties renting at £3,000 a month or extra — a market dominated by central London — availability has risen by 41 per cent since 2019. However for these in search of to lease for lower than £800 a month, there are 32 per cent fewer properties than only a 12 months in the past and 65 per cent fewer than pre-pandemic.