The UK’s private rental market is witnessing a significant rise in demand, with landlords reporting a noticeable increase in tenant interest. This trend underscores a growing challenge in the housing sector, spotlighting the dire need for more rental accommodation amidst rising pressures from various societal shifts.
The Surging Demand for Rentals
Recent research spearheaded by the National Residential Landlords Association (NRLA) reveals a telling story: two-thirds of landlords have observed a continuous rise in the demand for private rented housing. Specifically, in the last quarter of the previous year, 63% of landlords noted an increase in tenant inquiries, a stark jump from the 25% recorded before the pandemic in Q4 of 2019. This data, gathered by BVA-BDRC, a research consultancy, paints a clear picture of the escalating demand for rental properties.
Driving Forces Behind the Surge
The NRLA’s findings come on the heels of their warning about the anticipated boom in rental demand. Several factors contribute to this trend:
- Educational Aspirations: Projections from UCAS suggest a potential milestone of a million higher education applicants by 2030, marking a nearly one-third increase from 2022.
- Demographic Dynamics: The Office for National Statistics forecasts a 6% rise in the population aged 15 to 29 over the next decade, further fuelling demand for housing.
- Migration Patterns: With net migration expected to stabilise at 245,000 annually by 2026/27, the demand for private rentals is likely to soar, especially considering migrants’ propensity to rent.
- Homeownership Hurdles: Echoing the post-2008 financial crisis era, Hamptons anticipates a spike in potential homeowners, deterred by unaffordable mortgage payments, turning to the rental market instead.
Landlords’ Reluctance to Expand
Despite the burgeoning demand, NRLA survey data indicates a trend of landlords opting to sell rather than invest in new rental properties. Only 11% plan to increase their rental portfolios, whereas 30% intend to reduce the number of properties they rent out. This shift contributes to the acute shortage of rental homes, exacerbating the challenges tenants face.
Calls for Policy Reform
In light of these challenges, the NRLA is urging the government to reconsider its stance on taxation affecting the rental market. The association specifically calls for the abolition of the 3% stamp duty levy on the purchase of rental homes. According to Capital Economics, such a move could unlock nearly 900,000 new private rental homes over the next decade and potentially boost Treasury revenues by £10 billion through increased income and corporation tax receipts.
Ben Beadle, NRLA’s Chief Executive, emphasised the pressing need for more rental housing, stating, “The demand for private rented housing is only set to grow… would-be tenants will face the reality that there are not enough homes to meet their needs.” He criticises the government’s tax strategies for dampening supply and advocates for a broad-based approach to housing that includes expanding the private rental sector.